Blockchain Association backs Telegram again in case against SEC

The Blockchain Association, a group of prominent crypto firms that act as a liaison between crypto projects and lawmakers, has filed a second amicus brief in support of Telegram in its case against the SEC. A federal judge recently sided with the SEC’s claim that Telegram’s token distribution plan violates securities laws and ordered the messaging app company to refrain from issuing GRAMs to any investors, including those outside the US.

In response, the Blockchain Association said the court “erred” in its decision and once again argued that Telegram structured the original sales agreement (in this case, a SAFT) so that “post-launch Grams do not constitute securities.” Telegram appealed the ruling and is still waiting to hear an official response from the judge.

Why it matters:

• As mentioned, it is the second time the Blockchain Association has advocated for Telegram. The group filed its first amicus brief back in Jan., which introduced many of the same arguments presented in its most recent filing. Telegram also received support from the Chamber of Digital Commerce, a similar blockchain advocacy group, before its Feb. court date. Neither petition was able to sway the courts the first time around, and it would be a surprise if the court reconsiders its decision based on this second brief.
• This case could have much wider ramifications within the crypto. As Nic Carter points out, “The case is important because there are many, many SAFTs outstanding, and the Telegram case potentially generalizes to some of those other financial instruments that haven’t been scrutinized by regulators or had a day in court.” In short, a ruling in favor of the SEC could make it easier for the government agency to challenge other SAFTs in court, which could send shockwaves across all corners of the crypto ecosystem (e.g., exchange delistings, heavy fines for projects, etc.).

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