2020 is already promising to be an eventful year as bitcoin started with a record high hash rate. Now, lawyers representing the Telegram messaging app have urged a US court to dismiss regulatory demands for its bank accounts.
In a letter dated January 3 addressed to Judge P. Kevin Castel at the Daniel Patrick Moynihan US Courthouse, Slate, Skadden, Meagher & Flom LLP, and Arps described the Securities and Exchange Commission’s request as an ‘unfounded fishing expedition.’
Bank Accounts Do Not Support Case
Earlier, the SEC had demanded Telegram hand over all details of how it spent the money got from its initial coin offering (ICO) that raised a staggering $1.7 billion. After the regulator sent a letter to Judge Castel on January 2, the judge gave Telegram less than one business day to respond. The latest letter reads:
“On behalf of Defendants, we write in opposition to the letter motion filed by (the SEC), seeking to compel the production of voluminous and highly sensitive bank records that have little to no bearing on the claims and defenses in this action and would impose undue burdens on Defendants.”
The lawyers continued to state that the plaintiff’s letter misrepresented the legal issues in the case at hand by intentionally omitting critical facts. They said:
“Defendants respectfully submit that Plaintiffs motion to compel constitutes an unfounded fishing expedition and should be denied.”
Castel will now decide whether to disapprove or approve the SEC’s letter to compel Telegram to provide the needed information. The latest development is a continuation of a long legal process that has, up to now, failed to deliver any definitive action.
The SEC has extensively investigated multiple ICOs for securities violations. Canadian messaging app Kik’s $100 million token sale also resulted in a major legal battle. According to previous reports, the company was almost forced to close down in October 2019 due to this legal action.
In December 2019, Jay Clayton, the SEC chairman, described the commission’s approach to the crypto sphere as measured.