The Blockchain Association, a group of advocates who are part of the blockchain industry, filed an ‘amicus curiae’ to the United States District Court Southern District of New York as a response to the U.S. Securities and Exchange Commission (SEC) investigation against Telegram.
Sent on Jan 21, the amicus curiae represents a ‘friend of the court’ in the literal sense. Simply explained, the term indicates an entity who is not a party in the case but instead assists the court by providing information, expertise or insight on the case.
The document describes the Association’s attempt to dispute the charges originally filed by the SEC in October 2019 against the messaging app company. SEC’s investigation started as a result of the regulatory agency’s desire to prevent Telegram from delivering its new ‘Gram’ native token.
According to the SEC, Telegram’s $1.7 billion ICO token sale held in 2018 is an unregistered securities sale. Nevertheless, the Blockchain Association claims that the regulatory agency provides little clarity on the basis and requirements of a digital asset to be categorized as a security. Describing the issue, the Association’s letter reads:
“The SEC has acknowledged that at least some digital assets are not securities, and that the status of specific assets under the securities laws can shift over time. Nothing in this case calls for a broader ruling that digital assets are always or presumptively deemed securities.”
Blockchain Association believes that Telegram is regulatory compliant
In a latter part of the letter, the Blockchain Association claims that Telegram’s purchase agreement model is regulatory compliant with securities laws in the U.S. Despite their compliance, the Association argues that ‘the SEC has bizarrely chosen to attack the decision by Telegram to use an investment contract model that was designed expressly to comply with the SEC’s own regulations.’
The collective of advocates believes that the SEC is incorrect in believing that Telegram’s tokens, which did not exist at the time, represented investment contracts at the time of the ICO sale. Therefore, the SEC contradicts itself as a previous statement shared the view that tokens can turn into a non-security after the token’s blockchain network starts to function. The Blockchain Association further argues:
“The funding model at issue both complies with the securities laws and addresses the policy concerns underlying those laws. The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect.”
As CryptoPythia reported earlier, the SEC recently charged the founder of Opporty for organizing an unregistered securities sale which raised $600,000. According to some experts, the SEC behaves unfairly when it comes to targeting crypto companies and is more flexible to some ICOs than to others.