A least one crypto exchange, Circle, was asked to list Telegram’s tokens before the Securities and Exchange Commission (SEC) halted the launch of the TON blockchain, court filings show.
According to documents submitted to the court by the SEC, the agency obtained a registration form titled “Circle Asset Listing Form.” According to the form, it was filed to request a listing on Circle’s Poloniex crypto exchange and submitted by Sergey Vasin, chief operating officer of Blackmoon, a small crypto exchange that earlier had announced plans to list grams.
In the form, Vasin said he was acting as the chief operating officer of Gram Vault, a crypto custodian that claimed to have brought a large part of investors into the 2018 Telegram token sale and was planning to hold the tokens on those investors’ behalf.
Responding to the question of how he was associated with the project, Vasin said that he’s “COO at the largest custody of Gram tokens (75% of the second round, 50% of the first)” and added that “Telegram itself doesn’t work with the exchanges.”
In the subpoena to Telegram, the SEC requested information regarding the potential trading of grams on Coinbase, Poloniex, Bittrex, Huobi, Binance, Blackmoon Crypto, and Liquid.io — the last two had previously announced they would list grams.
Coinbase has also recently announced plans to offer custody of the tokens.
In the form, Vasin listed the main members of TON’s team, including brothers Pavel and Nikolai Durov, and said that “around 20 core” developers are working on the TON project, plus some “external teams,” including Ton Labs, a startup led by the TON investors that’s developing tools for developers and validators of TON.
As TON’s value proposition, Vasin cited Telegram’s 300 million-member user base and scaling solutions, naming ethereum as one of the project’s competitors.
Neither Vasin, nor a representative of Poloniex parent Circle, which announced plans to spin out the exchange a few days ago, responded to requests for comment by press time.
Communications with SEC
The SEC sued Telegram on Oct. 11, demanding it halt the launch of the messaging app’s blockchain project, Telegram Open Network (TON), and issuing tokens to investors in the private token sale in February and March of last year.
The SEC cited Telegram’s lack of collaboration with the regulator, pointing out that the company refused to comply with the SEC subpoena as an argument to the court for why it should halt the project.
However, the court filings show that Telegram had been in communication with the SEC over the summer and prior to the launch of the mainnet, which had been previously scheduled for the end of October.
In a document titled “Fourth Supplemental Memorandum to the Staff of The Securities and Exchange Commission” filed to the court by the company’s lawyers and dated July 25, Telegram provided the details of the upcoming token distribution and several updates over the course of the year.
“During our meeting with the Staff on July 18, 2019, we offered to provide this document summarizing key aspects of the TON Blockchain,” Telegram wrote, adding that the memorandum followed four others previously sent to the SEC. The dates of those letters were June 26, 2018, Nov. 20, 2018, Feb. 27, 2019 and March 18, 2019.
The company also proposed a step to ensure grams would not be considered securities, offering to amend the functions of the TON Reserve, the project’s treasury:
“Telegram is open to removing the TON Reserve’s Gram-buying function if the Staff believes that its inclusion would cause Grams to be considered securities under Howey.”
In an email to investors following the SEC lawsuit, Telegram said it had been interacting with the agency for more than a year, including the registration of the two offerings under Regulation D in February and March of last year.
In the subpoena to Telegram, the agency requested a broad range of documentation from Telegram, including all communications with investors, exchanges and potential custodians.
The SEC wanted to know the complete list of investors, the current status and the details of the use of the funds Telegram raised in the token sale and how Telegram made sure the investors were planning to actively use grams, rather than hold them as securities.
In response to the SEC, Telegram lawyer Alexander Drylewski argued that providing all the requested information would violate the confidentiality of Telegram’s relationships with investors:
“We’re available to meet and confer regarding these requests, which, as you know, implicate significant data privacy issues, among others.”
A court hearing to decide the fate of the project in the U.S. had been previously scheduled for Oct. 24 but was later postponed until Apr. 18-19, 2020.