In the hearing yesterday, U.S. District Judge, P. Kevin Castel issues an injunction against the distribution Telegrams’ Gram token [TON]. The judge also notes that SEC has shown ‘a likelihood of success’ in proving that SEC tokens might be ‘securities.’
Preston Byrne, partner at Anderson Kill law firm notes,
SEC v. Telegram motion for preliminary injunction: Telegram loses. They lose big.
The TON tokens were promised to accredited SAFT ( Simple Agreement for Future Tokens) investors who invested $1.7 billion in total. Telegram would be to liable to pay the investors back on the terms of the contracts.
Kik Vs. SEC Summary Judgement
Telegram’s loss is not only bad for the firm and it’s investors, but also a threat to other pending cases and cryptocurrencies. The Kik vs. SEC is one of the prominent cases that could lay-down the rules of securities view on cryptocurrencies.
Kik Interactive Inc. and SEC files for Summary judgment on their pending case related to the sale KIN Token on Friday, 20 March 2020.
Kik claims that there is sufficient reason to exclude KIN from under the premise of securities law. Kik Interactive Inc. argues that the firm is only involved in the distribution of the tokens, which are priced on utility and not as investment assets.
If the judgement against Telegram is taken as precedence, there is ample reason to believe that hopes of relief from the summary judgement is are bleak.
An End to SAFT Contracts?
As reported earlier on CoinGape, private investments by accredited investors using SAFT contracts were becoming popular in 2019. Some of the other crypto projects which are based on SAFT include Hedera Hashgraph and even exchange token from Bitfinex, LEO UNUS LED. The design and governance of these projects are distinctively different. However, the overall view on SAFT could likely lead to fines or injunctions against them as well.
Moreover, the current view of the SEC shuns the…