The Security and Exchange Commission (SEC) has put a halt on the initial coin offering by the famous messaging service Telegram for its cryptocurrency called Gram.
SEC’s action is aimed to prevent what it alleges as an unregistered ICO that has already raised more than $1.7 billion and sold about 2.9 billion digital tokens without any authorization.
“Our emergency action today is intended to prevent Telegram from flooding the US markets with digital tokens that we allege were unlawfully sold,” stated Stephanie Avakian, the co-director of the SEC’s Division of Enforcement.
But for Telegram, this is a serious issue because if the company is unable to distribute its “first batch” of tokens by the end of October, the company will have to give back the money it raised.
About 171 individuals and organizations have invested in Gram worldwide. More than one million tokens were purchased by US purchasers alone. SEC is pointing out that these sales have broken the law and now, Telegram will have to return the $1.7 billion it raised.
Telegram is also silent on its blockchain platform called the TON network that powers the Gram. It is similar to the digital wallet that Facebook is struggling to bring out in its Libra project. Both of these projects offer decentralized currency that anyone can access using a mobile.
SEC explains that Telegram’s network may help money launderers and drug dealers scale up their operations and cause a security concern in the country.