The Telegram token sale halt by the Securities and Exchange Commission of the United States is getting bigger. SEC has been reported to have blocked Telegram’s Ton cryptocurrency sale till further notice. SEC has reasoned that the alleged token sale is illegal since its unregistered and does not adhere to the prevailing regulations. However, there is not the EOS case that just happened some time ago.
Telegram token sale halt will tarnish the company’s image
Telegram Open Network, launched in January 2018 with a budget of approximately one billion dollars ($1B), has faced consistent hurdles. The launch date for their wallet was fixed somewhere in October or November. The coins launched in 2018 have now been declared unlawful by the SEC, saying it was unregistered, and full compliance was not achieved.
As per Stephanie Avakian, the co-director in the Division of Enforcement of SEC, the decision to halt the Telegram token sale has been implemented to avoid last year’s illegal tokens from entering the U.S. markets. The Telegram administration has not provided relevant information regarding its financial status, business operations, and associated risks before issuing the token sale. Such information is necessary before launching.
Telegram token sale halt is unlike the EOS case
A few months ago, SEC slapped a fine of twenty-four million dollars ($24M) on EOS as they conducted an ICO without proper approvals. EOS raised around four billion dollars ($4B) from the alleged ICO.
There is a significant difference between the two cases. EOS did not have much to show before the ICO as it was a relatively new firm with little activity history. On the contrary, Telegram was a successful company before ICO with a considerable history. The amount of information expected from Telegram was way higher compared to EOS. In fact, by not disclosing the relevant information, SEC may even put it under lens for fraudulent activity. So, Telegram token sale halt may just be the start of things to come.
This failure to provide information can dupe an investor – something which the SEC takes very seriously. A fraudulent claim against the company can have more profound ramifications for its prospects. It is still unclear how the situation will unfold as SEC investigates the matter.