As the battle between Telegram and US authorities is heating up, the messaging company seeks exemption of GRAM distribution for non-US based investors. It said that the preliminary injunction brought against the company should only apply to purchases made by US-based individuals.
Telegram wants to distribute GRAM tokens
The US authorities and Telegram are engaged in a constant legal back and forth. Judge Kevin Castel brought a preliminary injunction against the company on March 27, which blocks them from distribution GRAM tokens to their investors. GRAM is the native cryptocurrency of the TON blockchain created by Telegram which was sold during the $1.7 billion ICO conducted by the company. Note that $424.5 million of the amount raised by the company came from US based investors.
Telegram reacted to the decision and appealed to the Judge against SEC’s argument to block token distribution. It wants the court to clarify its decision and the scope of the ban on distribution. The company’s lawyers suggest that Judge Castel’s decision will apply only to investors based in the US. The company has about 39 US-based investors who may not get GRAM tokens, whether or not the distribution proceeds to other investors.
Telegram invoked extraterritorial jurisdiction
According to the company, more than 70% of its ICO funds come via Purchase Agreements with foreign investors. The contracts with investors include foreign choice-of-law provisions. The company is effectively challenging the authority of the Securities and Exchange Commission (SEC) over tokens sold to foreign investors.
Its court filings suggest,
“Defendants respectfully seek clarity with respect to the scope of the injunction, see Fed. R. Civ. P. 65(d); in particular, that the Order does not apply to Defendants’ Purchase Agreements entered into abroad with non-U.S. Private Placement investors not subject to U.S. securities laws.”
The SEC previously convinced the court that the company’s plan to distribute its securities must be halted. It said that once the company starts distributing these tokens to investors, the buyers as well the company, would sell billions of these tokens on the market. They will eventually make their way into the US via secondary market activity.
Telegram wants to rush the cash in the 2nd US Circuit Court of Appeals since it has a deadline of April 30 to deliver the tokens to investors.