The U.S. Chamber of Digital Commerce, a non-profit trade group founded five years ago, is weighing in on an ongoing legal struggle between the U.S. Securities and Exchange Commission and a company called Telegram whose Gram token sale, worth $1.7 billion, is now under scrutiny.
Last month, we reported how U.S. courts turned down the SEC’s motion to seize Telegram’s banking records, but did require the company to show more details about the $1.7 billion involved in what some characterize as a securities transaction.
Now, in an amicus brieffiled for the case, the Chamber of Digital Commerce is suggesting that not every blockchain transaction is a securities transaction.
“The Chamber has urged the Court to distinguish the term of digital asset, which is the subject of an investment contract, from the securities transaction associated with it,” writes Helen Partz at Cointelegraph. “The association stated that this requires two separate analyses including whether there is an investment contract that is offered in a securities transaction and whether the subject of the investment contract is a commodity that can be sold in a traditional commercial transaction.”
Clear as mud, right?
Here’s a shorter and clearer characterization of what the CoDC is saying:
“We further respectfully request that the Court affirm that a digital asset is not a security solely by virtue of being in digital form or recorded in a blockchain database.”
Part of the buried lead in this story is a monster 18-hour deposition given by Telegram founder and CEO Pavel Durov in Dubai. After critics clamored for such public inquiry, Durov sat down and apparently suffered through a lengthy interrogation.
Since Cointelegraph appended the full transcript of the deposition to a story, we can see exactly what was discussed. However, as in any typical deposition, the transcript is a barrage of seemingly disjointed questions and statements that goes on for many pages.
Here is Durov talking about “unsold Grams.”
“The unsold Grams, provided the network is launched with unsold Grams, will be locked until the creation of, the establishment of the TON Foundation. If the TON Foundation is never established, those unsold Grams will be locked for perpetuity.”
Similar and even much longer answers in the transcript apply to questions about how the telegram TON was designed, whether funds were treated a certain way at a certain time, and even what “decentralized” means.
Check it out if you have time – meanwhile, we’ll keep an eye on Telegram’s legal wrangling, because it’s a useful case study in the regulation of crypto.