This is the first of a three-part series based on Gary Gensler's extensive prior public statements on crypto. Here are parts 2 and 3. As the heir-apparent to the Chair of the Securities and Exchange Commission, Gary Gensler’s most critical role in the future of crypto will be his thoughts on how cryptocurrencies intersect with securities regulation. Where crypto meets the SEC The SEC has been a focal point for the crypto world’s attention for a long time. While its initial enforcement actions in crypto were largely limited to overt fraud, the 2017 DAO Report was its entry into even …

Ripple CEO Brad Garlinghouse has revealed the firm unsuccessfully attempted to settle its securities violation lawsuit with the United States Securities and Exchange Commission and slammed the “regulatory chaos” around cryptocurrencies. I’m not going to litigate the SEC’s unproven allegations on Twitter, and as you can imagine, there are new considerations to what can / should be said publicly after the litigation process starts. However, I would like to address 5 key questions I’ve seen. 1/10 — Brad Garlinghouse (@bgarlinghouse) January 7, 2021 In a Twitter thread addressing what he described as “5 key questions,” the CEO strongly denied the …

The Free TON project, a community-led software evolution of Telegram’s ultimately ill-fated attempt at launching a blockchain, announced on Tuesday the launch of the project’s effective mainnet. The network had originally launched in May 2020, building on Telegram’s code base but otherwise showing no association with the communications company and related $1.7 billion initial coin offering. Tuesday’s mainnet announcement is mostly a formality, as it does not involve new network launches. Instead, the developers have chosen the date to mark “sufficient decentralization” of the network and an effective mainnet start. A livestream ceremony was held to celebrate the occasion, featuring …

Earlier this year, Telegram announced that it was abandoning the Telegram Open Network — reeling from the effects of a drawn-out legal battle with the United States Securities and Exchange Commission. But because TON was an open-source project, with its entire code published on GitHub, the story was far from over. Here, Ton Labs CTO Mitja Goroshevsky reveals how a “devastating” setback was transformed into a decentralized movement involving tens of thousands of people. 1. What happened after Telegram left TON? A community came together and launched the Free TON network based on TON technology independently. The first version of …

Earlier this year, the United States Securities and Exchange Commission — in both the SEC versus Telegram and SEC versus Kik cases — vigorously argued that sales of contractual rights to acquire tokens on a when-issued basis (widely referred to as Simple Agreements for Future Tokens, or SAFTs) should be integrated with later sales of the tokens. When the judges in those cases issued rulings agreeing with the SEC, it felt like a door was closing on the SAFT process, making it unworkable for future crypto offerings. Then, on Nov. 2, a divided SEC adopted a series of amendments to …

The Enforcement Division of the U.S. Securities and Exchange Commission has collected more than $4.68 billion in illegal income and fines this year so far — with more than one quarter coming from Telegram’s ill-fated Gram token sale alone. In total, around $1.26 billion was handed over to the SEC by unregistered initial coin offerings. SEC Division of Enforcement Director Stephanie Avakian stated: “The Commission obtained judgments and orders totaling approximately $4.68 billion in disgorgement and penalties – the highest amount on record.” The division’s annual report for the 2020 fiscal year, published earlier this month, provides a comprehensive overview …

In 2017, when everything concerned with cryptocurrency and blockchain still looked fresh and interesting, it seemed that there would be no day without a new “revolutionary” project or idea. Decentralized financial system, decentralized torrent tracker, decentralized office documentation system. Decentralized, decentralized, decentralized. The overuse of terms like “transparent,” “distributed” and “blockchain-based” soon made most press papers look generic. The closer we got to the peak of the Bitcoin price at the end of 2017, the more absurd the names of new projects became: “Ethereum-based payment system for slaughterhouse industry workers,” “decentralized blockchain-based dwarf horse breeding platform,” “peer-to-peer personal banking service …

Telegram Messenger Inc. has been ordered to pay nearly $625,000 worth of legal fees to a small cryptocurrency firm that it sued over using the ‘GRAM’ crypto ticker and trademark. In a Nov. 2 ruling, United States District Judge Charles Breyer granted $618,240 in attorney’s fees for 1,030.4 hours of work billed at $600 per hour. Lantah had requested compensation at a rate of $900 per hour, but the judge reduced the fees to meet the market rate for the services. Lantah was also awarded $6,737.35 in costs that Telegram did not object to. Lantah LLC has been defending the …

Hackers compromised Telegram messenger and email accounts of multiple cryptocurrency executives last month by exploiting a vulnerability in a decades-old protocol. The fraudsters are believed to have been trying to intercept two-factor authentication codes of victims in an attack on Israel-based telecommunications provider Partner Communications Company, formerly known as Orange Israel. The attacks are currently being investigated by Israel’s National Cyber Security Authority and national intelligence agency Mossad. According to cybersecurity publication Bleeping Computer, the devices of at least 20 Partner Communications Company subscribers were compromised. Israel-based cybersecurity firm Pandora Security’s analysis of the event suggests the devices were likely …

Back in July, the Securities and Exchange Commission alongside the Commodity Futures Trading Commission fined investment app Abra for providing trading on synthetic assets. At the time, that looked like the end of the matter. However, in response to Cointelegraph’s Freedom of Information Act (FOIA) request for details in the Abra case, the SEC cited FOIA exemption 5 U.S.C. 552(b)(7)(A) — an exemption that only applies to ongoing investigations. The exemption applies to situations where releasing information could “reasonably be expected to interfere with enforcement proceedings.” The SEC’s response does not provide details into the ongoing investigation, and was careful …

As mentioned in the first and second parts of this story, on March 24, 2020, in a widely reported and closely followed decision, Judge Peter Castel imposed a sweeping preliminary injunction preventing Telegram from issuing its planned crypto asset, Grams. Shortly thereafter, the judge clarified his initial ruling by explicitly holding that the injunction applied to all sales worldwide regardless of where the original purchasers might be located. Efforts by Telegram to see that the Grams would not easily be resold into the United States were unavailing. This part of the story looks at the decision to apply U.S. requirements …

As discussed in the previous article, Telegram is a popular global instant messaging company. In 2018, it sold contractual rights to acquire a new crypto asset that it was developing (to be called Grams) to a group of accredited (and wealthy) investors around the world. Telegram raised about $1.7 billion from 171 investors, including 39 U.S. purchasers. This was a prelude to the planned launch of Grams, which was to occur about a year and a half later in October 2019. This two-step process — where a crypto entrepreneur sells contractual rights to acquire a crypto asset upon launch in …