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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

Shareholder

Richard Levin 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 experiencing rapid changes that are producing innovative new technologies: digital currencies, blockchain technology, peer to peer lending, robo advisors, crowdfunding portals, and...

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Paul Roshka, Polsinelli, financial securities lawyer
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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 claims in federal and state court, including class action defense. He is a seasoned litigator trusted to resolve our clients’ disputes. Paul and the lawyers he supervises know it is important to keep clients informed, and provide value for the services they render. He handles arbitrations and mediations nationwide. He also serves as a mediator in securities and complex matters involving real estate and other financial claims.

Paul’s passion for resolving complex disputes is equally matched by his passion for positively impacting his community. He has spearheaded numerous significant charitable efforts that have directly and positively impacted the lives of thousands of Arizona children and families. He is a Chairman Emeritus of Phoenix Children’s Hospital, a Past Chairman of the Hospital’s Foundation, Past Chairman of the Children’s Cancer Center and Past Chairman of Phoenix Suns Charities. Paul has served on the Boards of the Salvation Army and Xavier College Preparatory School.  Paul is currently on the Board of Southwest Human Development, an organization that seeks to create a positive future for every child. 

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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...

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