Former NASDAQ Lawyer Warns TON Against Going Rogue

Former NASDAQ vice president and assistant general counsel warned the TON Community against launching Telegram’s blockchain network until the 2nd U.S. Circuit Court of Appeals has its say.

Safe Harbor is not on SEC’s agenda

Manny Alicandro, a New York City lawyer with vast experience in traditional finance as well as in cases involving crypto assets, shared his concerns about the drastic plan put forward by the TON Community with Cointelegraph. He noted that in the foreseeable future, all issuers have to respect the Howey test. This may only change:

“... if the Three-year Safe Harbor proposal by Commissioner Peirce is ultimately approved. With that being said, Commissioner Peirce's term expires in June 2020 and the proposed Safe Harbor is not on the SEC's rulemaking agenda. In the instance that it is added and put out for public comment, this process can take years to seek final approval.”

No time for rash actions

Alicandro was referencing the announcement made by the TON Community that they may launch the fork of Telegram’s open-source TON blockchain, despite the unfavorable decision of the court in its battle against the SEC. According to the Community’s spokesperson:

“The community was ready for this (or another) scenario. We have several options, including the launch of TON by TCF [TON Community Foundation]. I will say more, no one (no one) can prevent the launch of TON”.

Also, Alicandro supposes that now is not the time for rash actions:

“Telegram has already filed a notice of appeal to the 2nd U.S. Circuit Court of Appeals. I wouldn’t recommend that they do anything until the 2nd Circuit appeal is decided. There is no need for urgency, especially since the world is in lockdown because of COVID-19”.

On the other hand, Alicandro believes there is no way for the U.S. government to prevent the launch of the decentralized open-source network since neither TON Labs nor the TON Community are based in the U.S.

Tezos sets precedent for Telegram?

As Cointelegraph reported on March 26, Telegram is seeking clarity from the SEC as to whether the injunction prohibiting the distribution of Gram tokens applies to all investors in its Initial Coin Offering or just U.S. residents. Alicandro believes that it applies to all, citing the Tezos case as precedent:

“The Court in Tezos performed an analysis of extraterritorially whereby Tezos had enough contact with the U.S. - server locations, marketing efforts made from the U.S. that the Court determined that it had jurisdiction over Tezos”.

With none of the stakeholders seemingly willing to compromise, this battle may get nasty.