Ongoing litigation between Telegram and the SEC could expedite the development of cryptographic legislation, according to the Blockchain Association.
"Telegram has failed, but this case could force Congress to pass a new law that would advance the issue in the context of regulatory law", — said Kristin Smith, CEO of the Blockchain Association.
Recall that the SEC demanded that Gram tokens be prevented from being distributed because they are unregistered securities, according to the regulator. The New York Court has satisfied this demand.
"We hope the SEC or Congress will provide clarity and a clear algorithm for developing and launching such projects," Smith adds.
The Blockchain Association is an alliance of companies in the cryptographic industry, including Coinbase, Circle, Digital Currency Group, eToro, Anchorage, Kraken, Ripple and others, which is dedicated to protecting industry and actively contributing to Telegram's opposition to the SEC.
Last October, the SEC demanded a freeze on the sale of Gram tokens and blamed two companies — Telegram Group Inc. and its "daughter" TON Issuer Inc. — for unregistered token sales and insufficient investor information.
Recently, Judge Kevin Castel of the United States District Court for the Southern District of New York temporarily banned the distribution of Gram tokens regardless of the nationality of the investor.
The Blockchain Association began defending Telegram's rights back in January when it insisted that the court dismiss the SEC's charges. The organization said that although the SAFT agreement was indeed an offering, the tokens themselves are not. Judge Castel did not agree with this assertion.
Smith believes that by prohibiting the distribution of Gram tokens, the SEC is trying to hold the company accountable for a non-existent crime: Telegram investors can find legal ways to sell their tokens without selling them to U.S. citizens, which the SEC allegedly is trying to prevent.
"If Gram is a security, then once approved by the SEC, tokens can be sold through alternative trading systems. Primary investors can keep them for a while and then resell them to private investors who can already sell them on foreign exchanges", — Smith reports.
This case sets an important precedent as it may prevent many new projects from being launched.
Smith believes that crypt currency networks have a unique economy that does not allow the use of traditional tools to raise funds. For them, selling tokens — is the most appropriate solution.
A review of Telegram with the SEC suggests that the SAFT method is far from being a secure method for raising capital. SAFT was created in 2017 as a legal way to sell tokens to institutional investors, as opposed to the less attractive ICO mechanism, which was more used to raise funds from retail investors. The SEC neither endorsed nor rejected this mechanism.
Squire Patton Boggs partner and co-author of the latest Blockchain Association review Benjamin Beaton believes the industry is well positioned to use the SAFT mechanism. Beaton is confident that the SEC's actions with respect to Telegram are unfair and create a number of uncertainties, further indicating the need for clear legislation for the cryptographic industry.
So far the proceedings do not seem successful for Telegram, but this is not the end for SAFT.
"Not all SAFTs work with the same algorithm. Just because it didn't work for Telegram doesn't mean the model won't find application in other projects", — says Beaton.
Smith also spoke about the prospects of this tool:
"SAFT will continue to exist in some form, but investors and developers will be more careful to study the agreements before deciding to apply them. At one point, this form was considered the most reasonable way, but now it seems «grey »".
Comments
Post a Comment