Late last week the injunction against Telegram’s GRAM token was extended again by a court in New York. The case, which was put in motion by the SEC accusing Telegram of illegally issuing the security, rather than a cryptocurrency, has garnered the attention of the blockchain community as a bellwether of regulatory sentiment.
Telegram’s token is arguably the most anticipated cryptocurrency outside of Facebook’s Libra. The way that regulators approach GRAM will affect how other projects release their tokens and could define the obligations that token issues have — if they have any — to investors in their projects.
As it stands now, Telegram has gotten some favorable news out of their legal battle, most notably in the court recognizing that GRAM was designed to be a decentralized project. However, no definitive conclusions have been reached yet, and with the April 30th deadline Telegram established for its investors approaching, time is of the essence. To get a better feel of this situation and what it means for the rest of the cryptocurrency industry we talked to Changelly crypto exchange CEO Eric Benz.
We started our discussion by asking Benz if he thought that there was an opportunity for Telegram to speed up the legal process and whether he thinks that the court will come down on the tech company’s side. Benz is bullish on GRAM and thinks that, despite the drawn-out legal troubles, it’s way too early to count it out. He told us, “TON should not be taken lightly as they are fully capable of fighting this battle to the bitter end. We have seen in recent months that the SEC is becoming warmer to crypto token projects but just how warm they will be with GRam remains to be seen. While everyone is waiting to hear negative news I am of the belief that we will see a historic ruling from the SEC in the ultimate favor of the TON team.”
Next we brought up Libra which has been navigating its own regulatory purgatory. We asked Benz whether, if the uncertainty surrounding the project continued, we could see a similar exodus of GRAM investors like we’ve seen recently from the Libra foundation. While Benz thinks that there is certainly a possibility for investors to exit early, he doesn’t see it happening at this point: “Most of the investors in the TON project are from the institutional side and they have a lot less to lose by exiting the project before any decision is made. However, I do not see many of the investors turning their backs on TON after waiting this long for a decision. At this point what’re another few months? Especially considering how lucrative it would be with a positive outcome from the discussions with the SEC.”.
Afterward, we asked Benz whether this whole legal battle and the uncertainty around Libra will dissuade other projects from following a similar path to that of Telegram and Facebook. Benz thinks that the troubles these companies are facing are growing pains of a fledgling industry that they are bearing because they came to the party early. Benz elaborated, “Over the coming years we will absolutely see more and more non-governmental blockchain-backed currencies. The significant impact these currencies will have on the overall development and penetration of these businesses will be absolutely critical when reaching customers both domestically as well as internationally. We have yet to witness the true potential of blockchain technology and this its corresponding token economy.”
We ended our discussion by considering how all this legal drama and the shifting Libra picture will affect future investors. There are those that think that this will all work to slow or halt crypto development by removing the incentive for investors to back projects in this space. Benz is not one of those people: “In my two decades of experience now in the world of Fintech and tech innovation I have all the confidence in saying that there is no such thing as “bad news”. All news can be considered good news especially when talking about such a nascent industry like that of crypto and blockchain. In the early years of any technology, there will always be investors looking for a quick win especially considering there are no regulations to impose. With further regulatory guidance coming in to protect investors from making poor investment decisions or from being scammed, we are beginning to see a more mature ecosystem being formed. The more regulatory guidance provided and implemented will help bring even more investors in and help avoid issues they have experienced in the past.”
With Telegram having committed to fulfilling investor obligations before the end of April, there is sure to be much more to come from this case. With consequences that could shape how projects launch tokens in the future and how state entities regulate those tokens, a lot of anxious eyes will be on this courtroom in New York in the coming months. Be sure to stay up to date with our coverage of the case as it unfolds.