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Technology

SEC blocks Telegram's $1.7bn cryptocurrency plans in the US

San Francisco, Oct 12 

The US Securities and Exchange Commission (SEC) has filed an emergency action and received a restraining order for the $1.7 billion planned token offering of instant messaging and voice over IP service Telegram's Blockchain and crytocurrency network.

Telegram's plans for its cryptocurrency and Blockchain network might be in jeopardy. The US SEC has filed an emergency action and obtained a temporary restraining order against the company, which prevents it from distributing and selling its Gram tokens in the country, Engadget reported on Saturday.

According to the regulators, the company sold 2.9 billion Grams at discounted prices to 171 initial purchasers worldwide, raising $1.7 billion in the process. A billion of those tokens were purchased by people in the US.

According to the SEC, Telegram did not register the offering with its office and since it sees Grams as securities, it is accusing the company of violating the Securities Act of 1933.

"Our emergency action today is intended to prevent Telegram from flooding the US markets with digital tokens that we allege were unlawfully sold.

"We allege that the defendants have failed to provide investors with information regarding Grams and Telegram's business operations, financial condition, risk factors, and management that the securities laws require," Stephanie Avakian, the SEC Division of Enforcement's Co-Director was quoted as saying in the report.

Telegram founder Pavel Durov was hoping to launch the 'Telegram Open Network' as a payment option that would exist apart from the global regulatory system in much the same way that Facebook's Libra would have done, according to a TechCrunch report.