Telegram, which has so far resisted the SEC’s requests to share financial information, has argued that its tokens were sold solely to accredited investors, and therefore it is not required to share information with the SEC.
However, the SEC believes that the financial information is crucial to the case, saying it will provide proof that the $1.7 billion raised from investors was actually spent on developing the platform and utility for GRAM tokens.
“Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”
The SEC argued that Telegram had already avoided revealing financial information to investors by selling an unlicensed security through its token sale, which sidestepped the requirement for a statutory prospectus.
“Evidence shows that Telegram made continuous offers and sales of the Purchase Agreements well after the offering for which it claimed a Regulation D exemption.”
The emergency order seeks expedited discovery of Telegram’s financial history, including a complete list of all the entities who purchased GRAM tokens, and up-to-date accounts from Telegram’s token sale and expenditure.
The claim, which the SEC described as “unfounded and deeply troubling”, may be seen as Telegram intentionally stalling the case or hiding crucial information, ahead of Telegram founder Pavel Durov’s deposition to the Court on January 7.
Therefore, the SEC has urged the Southern District of New York Court to act before Durov appears in court.
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