Telegram Open Network (TON) developers responded to its investors after American regulators abruptly announced that its $1.7 billion token sale was illegal.

In the letter, Telegram stated that they are continuing to assess the best ways to resolve the situation in the interests of relevant parties, including but not limited to evaluating whether to delay the launch date.

No clear feedback from SEC for 18 months

According to a TON letter to investors obtained by Cointelegraph, the firm has been trying to solicit feedback from the United States Securities and Exchange Commission (SEC) for the past 18 months regarding the TON blockchain and does not agree with the recent action. It wrote:

“We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position.”

Court hearing is scheduled for Oct. 24

After deeming Telegram’s initial coin offering (ICO) illegal, the SEC also filed a temporary restraining order, setting a court hearing in New York for Oct. 24.

Following the news, New York Times tech reporter Nathaniel Popper tweeted on Oct. 12 to point out the involvement of high-profile investors in Telegram’s $1.7 billion ICO, including Benchmark, Sequoia and Lightspeed. He wrote:

“The SEC’s move to shut down Telegram’s crypto project raises  questions about the big venture capital firms that gave it $1.7 billion and convinced themselves that it would pass regulatory muster. That includes Benchmark, Sequoia and Lightspeed.”

Yesterday, a private Telegram channel for TON investors removed all previous posts and announced it will be taking a break amid the increased level of regulatory uncertainty.

Criticism against SEC over no clarity for crypto

The SEC has been notably criticized for its lack of clarity regarding cryptocurrencies and ICOs. In late September, a group of lawmakers from the U.S. Congress sent a letter to the authority’s chairman Jay Clayton, urging the commission to issue clear guidance cryptocurrencies. Previously, Representative Warren Davidson hosted a crypto roundtable where participants expressed their concerns over the existing legal framework for ICOs and crypto.

Earlier this year, John Berlau, a senior member at libertarian think tank Competitive Enterprise Institute, criticized the SEC’s approach to regulating cryptocurrencies, arguing that its “burdensome regulation” kills transformative innovation. He also argued that the SEC’s scrutiny could threaten the functionality of blockchain tech if the agency treats cryptocurrencies as securities. In early April, U.S. lawmakers reintroduced the Token Taxonomy Act that aims to exclude crypto from securities laws.

Telegram to Pay Back Investors 110% After Gram Token Launch Fails – Again

Telegram has offered to refund investors after its scheduled release of the Gram token failed – again – due to regulatory complications. Investors will immediately receive 72% of their stakes, as first option, or 110% if they choose to wait another year. The second option may be paid in another cryptocurrency in the Telegram messaging application, with an additional 10% bonus.

The social network raised $1.7 billion in an ICO in 2018, promising investors the token Gram in return. Telegram made legal undertakings that it would deliver the cryptocurrency to investors initially by Oct. 31, 2019, or give back the money. The latest deadline for the launch of the Telegram Open Network (TON), the decentralized network supporting Gram, is today, April 30.

But in the period since its fund-raising, the company has faced serious legal challenges. The U.S Securities and Exchange Commission (SEC) wants the Gram project stopped because of alleged illegal activity by the Telegram development team.

Now, in a letter to TON investors posted on a Russian platform, Telegram stated that: “Unfortunately, in light of the recent U.S district court decision, we are unable to issue Grams to you by the 30 April deadline date.” The court decision prevents the company from issuing its promised digital asset or launching the underlying TON network until the dispute is resolved.

In the second repayment option, Telegram proposes to pay investors more, either in cash, stock or a different cryptocurrency, if they agree to “loan” their existing stake to the company until around this time next year. It said:

As a token of gratitude for your trust in TON, we are also offering you an alternative option to receive 110% of your original investment by April 30, 2021, which is 53% higher than the Termination Amount.

Investors have until the end of this week to choose a refund plan of their liking.

The Telegram app makes it easy to send encrypted messages between phones. More than 400 million people around the world use the messaging service every month, and at least 1.5 million people join the platform each day, the company says. The Grams are intended to make it possible to buy and sell goods on Telegram.

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