Telegram Seeks Exemption of GRAM Distribution to Non-US Investors

Telegram has once again reacted to a court decision barring the distribution of its GRAM tokens. Just two days after it appealed the judge's order and the SEC's arguments to halt the distribution, the messaging app has therefore asked the court to clarify the scope of its decision.

Going on the offense with a fresh filing on March 27, the lawyers representing Telegram claim that the preliminary injunction issued by Judge Kevin Castel only applies to US-based purchasers. They were reportedly only 39 participants who bought nearly 1 billion Grams when its $1.7 billion worth ICO raised $424.5 million from a group of US vetted investors.

Citing the Supreme Court's decision on the extraterritorial application of the US federal securities law, Telegram said over 70% of its ICO funds were raised through Purchase Agreements with foreign investors. Under this reasoning, Gram issuer has once again questioned the SEC's oversight authority since it has entered into these agreements with non-U.S. parties outside of the United States through contracts containing foreign choice-of-law provisions.

"Defendants respectfully seek clarity with respect to the scope of the injunction, see Fed. R. Civ. P. 65(d), in particular, that the Order does not apply to Defendants' Purchase Agreements entered into abroad with non-U.S. Private Placement investors not subject to U.S. securities laws," the company argued in court filings.

The SEC, in its request for a halt, convinced the federal judge that the cryptocurrency distribution plan is a securities offering. Further supporting its claims, the regulator said that once the Grams were delivered, the token buyers and Telegram itself would be able to sell billions of these tokens into the US through secondary market activity.

Telegram has already filed a notice of appeal to the 2nd US Circuit Court of Appeals, and it apparently tries to rush its case, considering that it faces an April 30 deadline to deliver the Grams to the initial purchasers.