US SEC Halts TON Launch Over $1.7B ICO

TON will ostensibly be integrated into the app, which boasts over 200 million users worldwide and is widely popular within the blockchain and cryptocurrency community.

According to the documents Pavel Durov filed with the SEC, only those investing a minimum of $1 million were allowed to partake in the TON sale.

In early October, Telegram published the entire TON source code on Github and announced that the launch of its long-awaited blockchain project would be scheduled for the end of the month.

The first problems concerning the TON token sale surfaced in July, when Gram Asia - reportedly the largest holder of Telegram's Gram tokens in the region - started selling rights to its GRM holdings in partnership with Japan-based crypto exchange Liquid at $4.00 per token, thus tripling the original $1.33 sale price.

Now, just a couple of weeks prior to the TON release, the SEC has stepped in with a restraining order, halting the token offering.

The regulator's complaint alleges that Telegram and its TON subsidiary did not register the sale of the GRM token, which the SEC deems to be a security.

"Telegram committed to deliver Grams to the Initial Purchasers in conjunction with the launch of the TON Blockchain by no later than October 31, 2019 and it plans to sell millions of additional Grams at the same time," the complaint reads.

TON Board will be with you again once we have more clarity on the legal status of the TON and Gram as well as permitted type of analysis that may be published on them.

Internet attorney and cybersecurity law professor Andrew Rossow believes that by putting the brakes on the TON sale, the SEC is showing it will no longer accept token offerings skirting securities regulations.

The SEC's intervention is happening against the backdrop of increasing scrutiny showcased by U.S. regulators, notes Selva Ozelli, international tax attorney and CPA. As Ozelli pointed out, on the same day the SEC started its probe into the TON sale, the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the SEC issued a joint statement to remind people - from both offshore and the U.S. - who are engaged in activities involving digital assets of their Anti-Money Laundering and Countering the Financing of Terrorism obligations under the Bank Secrecy Act.