The case between the mobile messaging platform Telegram and the United States Securities and Exchange Commission (SEC) has continued to heat up since it was first announced.
Both parties have gone through the motions, trading filings, and leveling accusations in preparation for a case whose resolution could set a precedent for how financial regulators across the United States will be treating crypto tokens being released from here on out.
No Love for the SEC’s Approach to Regulation
The latest development in the case, however, is the entry of developers on the Telegram Open Network- Telegram’s blockchain platform that houses the company’s GRAM digital tokens. In an amicus curiae submitted on February 14, the “The TON Community Foundation,” a non-profit organization made up of TON developers across the world, argued for the London-based tech giant and criticized the SEC’s approach to the landmark case.
An amicus curiae is a legal document in which an entity that isn’t part of a legal case offers insights into the matter at hand. While it doesn’t usually factor into the resolution, the court- or parties to the case- could choose to take its suggestions into account at their discretion.
In this particular filing, the TON Community Foundation explained that they were formed as a “professional community of active participants in the TON project in whose interest it is to see the TON blockchain mainnet launched as soon as possible.” They urged the court to immediately curtail the SEC’s powers and prevent it from having oversight of Telegram’s blockchain project, explaining that the agency will impose an “innovation-suffocating regime” that will defeat the purpose for which both the TON and the GRAM were built.
Academic Reviews Were Biased and Unrealistic
The report went on to criticize a review of the TON, which was given by Maurice Herlihy, the An Wang Professor of Computer Science at Brown University, for the SEC. The Herlihy report was submitted in defense of the SEC’s case last December, and it made several arguments- including the fact that the tech company had misled investors by claiming that it might not support TON after the blockchain’s launch.
Herlihy also explained that Telegram hadn’t provided evidence of the state of TON’s development at launch, and that the company had intended to publicly distribute GRAMs (as evidenced by its sale of the token to initial purchasers).
In its rebuttal, the developers’ explained that Herlihy was relying on a definition of “blockchain:” that had become obsolete since it didn’t account for the prominence of smart functionality. They also hammered the professor’s “academic scrutiny” and “unrealistic standards of pre-launch performance, security, and maturity,” claiming that these standards would have destroyed projects like Bitcoin and Ethereum in their infancy as well.
Given the Foundation’s affiliations with Telegram, it’s unlikely that their recommendations will be adopted in the court. However, they do provide some insights as to what many in the crypto community have been saying for a while now- the SEC doesn’t seem to have the best interests of the crypto space at heart.