Since the ban of Gram ICO by the US authorities refers to force majeure, Pavel Durov, even if he does not launch the project on time, won’t have to return the funds to investors.
Recall that on October 11, the US Securities and Exchange Commission achieved a temporary suspension of the initial placement of Gram tokens by Telegram and its subsidiary TON Issuer in the country. The Office believes that operations with the Gram cryptocurrency were conducted without the necessary registration, in violation of the Securities Act of 1933.
A day after the SEC decision, the Durov team announced that, due to new circumstances, it could postpone the launch of the project.
“Anything can happen, the project is big, problems are possible,” David Yakobashvili commented on the SEC decision, investing $10 million in TON. However, another (anonymous) investor admitted that on the first day after the announcement of the US authorities he managed to communicate with a dozen comrades in misfortune. “Everyone laughs, very nervously,” he describes their reaction.
In total, investors invested $1.7 billion in the project. Durov promised them a refund (minus costs) if he did not launch the blockchain platform on time – until October 31, 2019.
The Bell got acquainted with the Gram purchase agreement, which was signed by the participants of the second stage of the ICO (two investors confirmed its authenticity). It follows that it is most likely that Durov will not have to return the money after the SEC decision, even if the launch of the platform is postponed.
The actions of the authorities and the application of legislative or regulatory norms in the agreement are called force majeure – from the same category as floods, fires, earthquakes, wars, etc. The onset of force majeure, the document says, “releases of the Gram issuer from its obligations to contribute to the transformation of Gram into the main currency of Telegram through the introduction of TON wallets into a messenger. ”
Moreover, the agreement explicitly states that “no government agency approved the issuance of tokens and made recommendations regarding investments in Gram, which means that cryptocurrency will be issued and delivered to customers at their own risk.” Does this mean that the company will not return funds to investors – it is not clear to the end, but, taking into account the meaning of the agreement, the probability of this is high.
The agreement includes warnings for investors from all possible jurisdictions, including the United States. The latter are warned that the sale of Gram was not registered, as required by American law, and, therefore, buyers will not be able to sell, mortgage or otherwise dispose of these securities under US law.
According to one of the investors in the project, close to the Durov team, most likely, the developers will describe in detail the whole situation to investors and ask them to wait. “According to my feelings, many will agree to this: everyone with whom we talked about this is on the side of the team and are ready to do everything so that the blockchain can still be launched,” the investor said.
Other insiders believe the US will ban selling Gram to US investors. It follows from the SEC lawsuit that a total of 39 US foundations and individuals invested nearly $425 million last year in this ICO. As long as the trial goes, American buyers are likely to receive neither money nor tokens, since the agreement is structured in such a way that responsibility in the event of regulatory risks is transferred to the investors themselves.
The Durov team has a chance to defend its position in the American market: in the USA, the company Skadden works for it, which Forbes magazine called the most influential Wall Street law firm in 2014.
However, even if the final court decision does not affect investors outside the United States, it will also be important for them, since it will affect the attitude of global regulators to TON. If TON loses the US market, it will hit Gram’s capitalization. In addition, if the SEC manages to connect Telegram and TON, the commission can achieve a ban on Telegram in US app stores (Google and Apple).
SEC operates as part of a procedure where it is necessary to determine what you sell – securities or currency. The American regulator believes that Durov was selling securities to investors, but did not file a registration application and thereby violated the US Securities Act. If the Durov team still decides to comply with US law, it must submit an application in S-1 form, as ordinary companies do when placing them. But now it’s almost impossible to realize such a scenario – there’s no time for that, and this will make Gram ordinary security regulated by harsh American laws.
You can generally outlaw Gram: not answer SEC, start blockchain, distribute Gram on contracts and never come to the USA again. According to two insiders, Durov and his team members are already avoiding appearing in the United States. This option is theoretically possible, but it will cause confusion on the part of investors and financial regulators around the world.
Another option is to recognize Gram tokens not as security, but as utility tokens, that is, the internal currency of the TON platform. This will help to avoid regulation by the SEC, but in this case, there may be problems with the purchase and sale of the token for fiat.
So far, the Durov team has not given a clear answer, what will it do after the decision of the SEC. The letter to the creators of the project says that together with the consultants, they analyze all possible options, “based on the interests of all interested parties.” One of them is delaying the launch of the project. TON developers promise to provide more information this week.