CFTC Asked to Provide Opinion in SEC Case Against Telegram ICO

A U.S. choose has requested legal professionals from the Commodity Futures Buying and selling Fee (CFTC) to supply an opinion within the case introduced by the Securities and Trade Fee (SEC) towards Telegram’s $1.7 billion token sale.

On Thursday, Decide Kevin P. Castel of the Southern District of New York issued an order inviting the CFTC’s workplace of the overall counsel “to precise its views on the problems presently earlier than the Court docket.” The opinion might be submitted in writing, the choose stated.

Whether or not “gram,” the cryptocurrency of Telegram’s TON blockchain, is a safety or a commodity has been the principle query of the four-month-long litigation. The SEC insists the not-yet-issued grams had been bought to traders as securities, with the expectation of future income.

Telegram maintains that, identical to bitcoin and ether, as soon as grams are issued they are going to be a commodity – merely the native token of the TON blockchain.

In a memorandum beforehand submitted to court docket, the SEC stated there isn’t any means grams might be thought-about a commodity as “the worth of that asset could have depended and can nonetheless depend upon Telegram’s efforts to extend demand for and, thus, improve the worth of that asset as purchasers moderately anticipated and can count on.”

“Not like gold, comedian books and Krispy Kreme donuts – commodities Telegram compares to Grams – Grams haven’t any intrinsic worth,” the SEC argues, so the worth of grams depends completely on Telegram’s efforts to create a blockchain, and this, in accordance with the Howey check, is a function of a safety.

Telegram, in its responding memorandum, argued it had by no means marketed grams as an funding device, however all of the advertising supplies “clearly and primarily emphasised the meant consumptive worth of Grams as ‘the primary mass-market cryptocurrency.'” The primary worth proposition has been that the tokens can be broadly adopted by customers when TON is reside, the memorandum goes.

The CFTC has beforehand acknowledged that cryptocurrencies “resembling bitcoin” meet the definition of a commodity however the company has not expressed its opinion on token gross sales like Telegram’s. In a joint Wall Road Journal op-ed in 2018, SEC and CFTC chairmen Jay Clayton and Christopher Giancarlo stated that “lots of the internet-based cryptocurrency buying and selling platforms have registered as cost providers and aren’t topic to direct oversight by the SEC or the CFTC.”

Additionally on Thursday, Decide Castel ordered the primary listening to for the case be rescheduled from Feb. 18 to Feb. 19, citing a delay in one other trial as the explanation for the rescheduling.