The U.S Chamber of Digital Commerce has filed a document countering the U.S Securities and Exchange Commission (SEC) claim in the ongoing unregistered securities case against Telegram and its wholly-owned subsidiary, TON Issuer Inc.
As Coinfomania reported earlier, the SEC filed an emergency action and obtained a temporary restraining order against Telegram and TON Issuer, for raising $1.7 billion through the sale of its token, Grams.
The regulator claimed that the token was unregistered securities, hence it sought-after permanent injunctions, disgorgement with prejudgment interest, and civil penalties from Telegram.
According to the SEC, the move is purported to stop Telegram from distributing the alledged unlawful tokens in the U.S. markets.
“We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require,” SEC noted.
However, the case has taken an interesting turn as the Chamber of Digital Commerce argued that an asset [Gram] doesn’t automatically become security by virtue of being subject to an investment contract (i.e., a securities transaction), which SEC thinks otherwise.
The Chamber, which presents itself as a non-profit trade association that advocates the acceptance and use of digital assets, said it picked a strong interest in the SEC’s case against Telegram.
The interest, however, is focused on the analysis of whether a transaction is an investment contract, and how a “security,” is applied to transactions involving digital assets.
“Although the Chamber does not have a view on whether the offer and sale of Grams is a securities transaction, the Chamber has an interest in ensuring that the legal framework applied to digital assets underlying an investment contract is clear and consistent,” the Chamber explained.
Therefore, in the petition filed with the New York Southern District Court, the Chamber urged for a clear differentiation of investment contract from the digital asset, which requires two separate analyses:
(i) Whether there is an investment contract offered in a securities transaction, and (ii) whether the subject of the investment contract is a commodity that can be sold in an ordinary commercial transaction.
Furthermore, the Chamber asked the Court to affirm that a digital asset is not a security because it’s in digital form or recorded in a blockchain.