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DC Blockchain Advocacy Group US Chamber of Digital Commerce Supports Telegram Vs. SEC Case

They say the federal securities laws that apply to digital assets is stifling economic development in the United States.


The Blockchain Advocacy Group The US Chamber of Digital Commerce (CDC) is filing an amicus brief advocating for a predictable legal environment for the blockchain industry in an attempt to counter the SEC’s motion for a summary judgment against Telegram Group Inc. and its wholly-owned subsidiary TON Issuer Inc.

The Blockchain lobbyists at the CDC filed the documents with the New York Southern District Court on January 21, 2020, in an attempt to try to make the Court consider its amicus curiae brief. The latter is a statement by someone who is not a party to a case and is not solicited by a party, but who assists a court by offering information that bears on the case.

In a recent press release, the CDC noted that they are piping into this case as a true “friend of the court” and want to help by providing a legal framework based on settled SEC jurisprudence to create a predictable legal environment for the blockchain industry. 

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The claim to not take a view on whether the offer and sale of Grams is a securities transaction but rather they want the SEC  to distinguish between the subject of an investment contract (the digital asset) with the securities transaction associated with it.

They state that it requires two separate analyses:

  1. Whether there is an investment contract, offered as a securities transaction.
  2. Whether the subject of an investment contract is a commodity that can be sold in an ordinary commercial transaction.

The Chamber said they further seek confirmation that a digital asset is not a security solely by virtue of being in digital form or recorded in a blockchain database. Uncertainty as to how the federal securities laws apply to digital assets is stifling economic development in the United States. This technology-neutral principle remains consistent with the law established by the Howey case and its progeny.

The Chamber is represented by Lilya Tessler, Partner and New York head of Sidley Austin LLP’s Blockchain and FinTech group. The amicus brief includes feedback from numerous contributors from the Chamber’s blockchain industry membership.

“An extraordinary amount of work went into developing this brief on behalf of the blockchain and digital asset industry. We greatly appreciate the thoughtful analysis that Lilya Tessler and her team provided, as well as the countless hours of contributions from many of our members,” said Perianne Boring, Founder and President, Chamber of Digital Commerce.  

“The Court has an important opportunity to establish a binding precedent in helping practitioners better discern when the securities laws apply to digital assets and when they do not under the Howey framework,” added Amy Kim, Chief Policy Officer of the Chamber of Digital Commerce. 

“We are delighted to represent the Chamber as amicus curiae in this pivotal case, which hinges on the Court’s application of the correct analytical framework to digital assets,” said Lilya Tessler of Sidley Austin LLP “The decision, in this case, will have far-reaching implications for blockchain market participants, including investors, trading platforms, and technology companies that seek to facilitate both securities and commercial transactions in digital assets.” 

In October 2019, the SEC first went after Telegram and TON when they filed for an  emergency action and temporary restraining order in the federal district court in Manhattan, charging both defendants with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act, and seeks certain emergency relief, as well as permanent injunctions, disgorgement with prejudgment interest, and civil penalties. Telegram raised $1.7 billion in a token sale in 2018. 

Then on January 8, 2020, the Court Rejected the SEC attempt to obtain financial data from Telegram. Followed by another move, which was based on the data provided by the regulator from Gem Limited and Da Vinci Capital Investment Fund requesting a $1.1 million and $209,783 commission invoice in the summer of 2018, a few months after the initial placement of Gram tokens.

According to, the SEC believes that the companies violated Regulation D by requesting bills for “subsequent sales” of Gram purchase agreements. According to Regulation D, and Telegram, as an issuer, was obliged to take appropriate measures and make sure that buyers did not sell the issuer’s securities, followed by payment of commissions to them.

Then further documents were filed by the SEC with the Court on January 15, 2020,  took another tack against the defendants, insisting that it is entitled to summary judgment as a matter of law on its claim that the two offshore entities conducting an alleged unregistered, ongoing digital token offering in the United States.

Documents seen by FinanceFeeds and further analysis show:

“To avoid liability, the regulator says, Telegram has the burden to prove that its transactions were exempt from these requirements. However, because Telegram’s offers and sales were but an intermediary step towards its ultimate, indisputable goal – the worldwide distribution of Grams – no exemption is available, the SEC argues.”

“This case concerns Telegram’s active promotion and sale of “Grams,” a form of digital token, which according to the SEC, is a security. In 2018, Telegram and TON Issuer effected a purportedly private sale of approximately $1.7 billion worth of Grams, with no registration statement in effect. The SEC argues that the defendants thus violated Section 5 of the Securities Act of 1933 (“Securities Act” or “Act”), 15 U.S.C. § 77e.”

“The SEC now seeks summary judgment for this claim because the relevant transactions, the lack of a registration statement, and the fact that Grams are securities can all be established with undisputed evidence.”

“The SEC asks the Court to consider the economic reality of what Telegram was doing: raising money to build a platform that would create value and profits for the investors. Much like a stock certificate, a Gram represents an asset. When sold to the investors, that asset was an investment contract. And, upon the launch of the TON network, that asset will remain an investment contract. The sale of Grams was not registered and thus violated Section 5 of the Securities Act, the SEC concludes.”

The Court scheduled a hearing in the SEC v. Telegram case for February 18 and 19 to consider the SEC’s request for a preliminary injunction preventing the delivery of Grams to purchasers. Each party has filed motions for summary judgement that focus their arguments on whether Grams are securities based on the facts in the case, while the Chamber’s proposed brief sets forth the applicable legal standard and implications of the Court’s decision in setting a precedent for the entire industry.

Headquartered in Washington, D.C., the Chamber of Digital Commerce is the world’s first and largest trade association representing the digital asset and blockchain industry. For more information, please visit, and follow us on Twitter @DigitalChamber.

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