In the Telegram court case, several investors were discovered

Recent developments in the court battle between the Telegram and the SEC revealed the names of investors who in 2018 were involved in the sale of several billion dollars worth of the Gram cryptocurrency.

Pavel Durov, CEO of Telegram, said Mickey Malka of Ribbit Capital was a frequent investor. Malek is known in the cryptocurrency industry for his role in the currently defunct Bitcoin Foundation.

The venture capitalist David Yang also took part in the deal. Yang is a member of “Band of Angels” based in Silicon Valley.

In addition, several VC companies have invested in the project, including Kleiner Perkins, Fortress Investment Group, Draper Dragon, Dragoneer, DRW Holdings and Redpoint.

Why does it matter

This development is the result of a regulatory complaint filed by the US Securities Commission (SEC) against the Telegram at the end of 2019. It considers that this was an illegal sale.

In the complaint, SEC states that the Telegram sold 2.9 billion Gram tokens at preferential prices to 171 customers worldwide. According to the complaint, the company did not register its offer or sale. Since the SEC considers Gram to be securities, the Telegram thus circumvented the 1933 Act. And since this law requires all securities to be registered with the SEC, the Agency considers this sale illegal.

The question now is whether Telegram made its token sale to finance the development of its blockchain project. If the company made a sale to raise funds for more general purposes, it was likely to have breached the securities regulations.

The names of the investors in the Gram cryptocurrency should therefore be an indication that the Telegram received the funds invested to finance its project. For example, Durov highlighted Malka’s experience with the blockchain as proof that investors were able to make full use of the Telegram token:

“It was obvious that some investors [such as Micky Malka] had experience with these validation processes or at least were closely associated with parties who had experience with such processes.”

Individuals linked to the above VC companies also submitted their own testimony. Their statements seem to reflect the standard reasons for trading in the token purchase, so it is unclear whether these statements will help the company.

Second point of view

Whether the Telegram has correctly invested its resources in developing a blockchain is important, but it is not the only one question.

Some have claimed that the SEC is acting too hard. In a recent short report, association Blockchain argued that the sale of Gram tokens was a contract between “sophisticated private parties” and that SEC had done unnecessary damage.

In other words, since the Telegram did not sell tokens to the public, the SEC may not be justified in trying to enforce regulations designed to protect the public. For example, private investments from wealthy accredited investors are allowed under the exemption of “Regulation D”.

Summary

The telegram has been working on a blockchain project for about two years. In January 2018, the first reports of his initial coin offer (ICO) appeared. In March 2018, the company confirmed that it eventually received $ 1.7 billion. Now the Telegram has decided to make major changes based on the SEC action. This indicates that the project is in a precarious position despite the progress made since 2018. We will continue to monitor how this dispute will evolve.