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Ring of Fire - SEC Hangs Up on Telegram

After an extended fight with the U.S. Securities and Exchange Commission ("SEC"), Telegram has agreed to resolve charges the company's unregistered offering of digital tokens called "Grams" violated the United States federal securities laws.  Telegram agreed to return more than $1.2 billion to investors and to pay a civil penalty of $18.5 million.

Telegram is the most prominent example of the failed Simple Agreement for Future Tokens ("SAFT") concept which has drawn the attention of the SEC.  Proponents of SAFTs mistakenly believed the tokens distributed as part of the SAFT were not securities.  The SEC and some courts believe the tokens issued as part of a SAFT are securities which must be sold pursuant to a registration with the SEC or an exemption from registration.

Telegram is unlikely to be the last settlement involving a SAFT that are deemed securities sold without a registration.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 183
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About this Author

Richard Levin Polsinelli Fintech Attorney
Shareholder

Richard Levin is the Chair of Polsinelli’s Chambers rated FinTech and Regulation Practice.  He brings his experience as a senior legal and compliance officer on Wall Street and in London to bear in advising clients on corporate, securities and regulatory issues. A problem-solver by nature, his practice focuses on helping financial services and technology (FinTech) clients identify and address regulatory issues as they build their businesses.

The FinTech sector is...

303.583.8261
Paul Roshka, Polsinelli, financial securities lawyer
Shareholder

Known for his thorough preparation and persistence, Paul Roshka has a national practice representing companies, their directors, officers, and employees during investigations and enforcement/disciplinary proceedings involving potential violations of the federal and state securities laws, and other financial regulatory statutes and rules. He has handled matters initiated by almost every SEC Regional Office and FINRA District Office, and their Home Offices in Washington, D.C.

He is also a recognized bet-the-company litigator. Paul has defended securities/financial...

602.650.2098
T.J. Mitchell Commercial Litigation Lawyer Polsinelli Law Firm
Associate

Thomas (T.J.) Mitchell is an associate in the Commercial Litigation practice group. T.J. partners with Polsinelli’s seasoned attorneys to provide litigation solutions in complex financial and business disputes, manage clients’ risk, and allow clients to focus on driving their business or personal objectives. Drawing from his experience working in the legal department of a large technology company, T.J. understands what clients expect from their outside counsel or personal attorney and takes the time to understand their unique challenges, goals, and values. These priorities shape his work...

602-650-2005
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