Secure messaging platform Telegram has asked the New York Southern District Court to dismiss the lawsuit filed by the Securities and Exchange Commission (SEC) against their Initial Coin Offering (ICO) on November 12. The federal regulator filed this lawsuit after classified the native cryptocurrency of the ICO gram as a security and thus claiming jurisdiction over its mechanisms.
The fresh dismissal filing on November 12 shows the growing frustration of Telegram and other companies to have their coin offerings in the country. Most Initial Coin Offerings are already banned in the country as the SEC has chosen to classify them under securities and thus subject to regulatory approval.
The SEC had previously argued in court that Telegram had engaged in the release of unapproved securities called GRAM tokens. The regulator claimed that investors were misled and even then they refused to take a refund of the raised money.
According to the latest filing, Telegram claimed:
“Plaintiff has engaged in improper ‘regulation by enforcement’ in this nascent area of the law, failed to provide clear guidance and fair notice of its views as to what conduct constitutes a violation of the federal securities laws
Subsequently, the Telegram legal team has requested the court to end the SEC’s complaint entirely, seemingly closing doors on a negotiated settlement.
This appears to be a major legal escalation after years of SEC clampdown on the industry and the sector in general. The Telegram ICO was one of the biggest capital raising events in recent memory with over $1.7 billion raised in 2017. The ICO was contested and now its future hangs in the balance. The SEC is also expected to up its ante and will file further charges against Telegram in the near future.