The Securities and Exchange Commission in the United States has had problems with crypto and crypto-related firms in the past and this includes issues they have had with initial coin offerings a few years ago. The SEC, at a point in time, had to shut down dozens of ICOs in a single year due to them being unregistered or fraudulent. There is also the ongoing issue of their classification of various tokens as this has led to lawsuits between them and various firms who have launched tokens such as Kik and now Telegram.
The latest development in the case is that Telegram will have to provide their banking records which the Security and Exchange Commission believe are evidence of misuse of funds during their $1.7 billion Gram token offering.
The new filing was done on January 13, 2020, at the court of the Southern District of New York (SDNY), and states that Telegram has until February 26, 2020, to provide the bank records in question. The SEC has demanded the bank records previously but were denied by a judge on the basis of privacy but it seems this has now changed.
However, Telegram will have the option of redacting some information from the banking records before they are made public in accordance with foreign privacy laws. Telegram itself is not a US-based company but is Russian-founded and is based in Berlin, Germany. The SEC has previously claimed that these banking records will ask as proof of Telegram’s misconduct and not that Telegram has agreed to show both the courts and the public the banking records, this theory might be proven or disproven. This entire saga started in October 2019 when the SEC issued a cease and desist to Telegram for their Gram token offering on the basis of them being unregistered securities. This once again brought up the age-old debate or what qualifies as a security token and what is a utility token.