While the SEC’s relationship with the cryptocurrency industry is complicated in itself, 2019 saw the commission enter into legal disputes with two different social messaging platforms over the issue of tokens. The first was with Kik in a dispute over there Kin token which the SEC claims is an unregistered security but which Kik claims is actually a utility token. This led to a lawsuit that nearly ended the social messaging platform altogether. Another prominent one is with Telegram over the Gram token which they also claim is an unregistered security.
In a new twist in the case, the United States security and exchange commission has requested the High Court of England and Wales to compel Telegram’s former chief investment advisor to testify in the ongoing case.
Summoned to Court
This information was made known through the court documents filed with the U.S. District Court for the Southern District of New York on December 5, 2019, in which it was requested that John Haymon, the former chief investment advisor to Telegram, be summoned to court.
The reason that Haymon is being sought out for this purpose is due to his efforts in the fundraising for the Gram token as well as the fact that he spoke with dozens of investors for the Telegram Open Network. Also, the CEO of Telegram had previously described him as THE person that runs the distribution of the Gram tokens and as such, he will be a key witness in this case. The SEC claims that they initially reached out to Haymon and his legal team and they had agreed to a voluntary appearance but later on, stopped returning their phone calls and emails. As a result of this, they are seeking the intervention of the courts to force him to attend a deposition given that he is a UK national and resides within the UK.
The case between the SEC and Kik as well as the case with Telegram is significant because it sheds more light on the age-old confusion of what exactly qualifies as a security token and the utility token and also touches on the often hostile relationship between the commission and cryptocurrency industry, particularly when it comes to asset categorization.