Telegram: deconstructing one of the biggest blockchain cases of 2020

Abstract

Purpose

To discuss and analyze the facts and circumstances of the October 11, 2019 U.S. District Court for the Southern District of New York temporary restraining order halting the distribution of cryptocurrency tokens in SEC v. Telegram Group Inc.

Design/methodology/approach

Provides an overview of the case, an analysis of the Court’s ruling, details on the final resolutions, and some key takeaways.

Findings

Given the lack of judicial precedent in this area, as well as the size and profile of the Telegram project, the Telegram case was closely watched by blockchain industry participants and represents a significant development for this emerging market. The Telegram court’s approach, if broadly adopted, could prove very challenging for those attempting to launch decentralized networks involving blockchain-based tokens.

Practical implications

The Telegram case represents just one court’s view and is based on a very fact-specific inquiry. However, given the Court’s apparent deference to the SEC’s positions on the facts at hand, and the lack of judicial precedent in this area, the blockchain industry should pay close attention to this decision.

Originality/value

Expert guidance from lawyers with extensive experience in blockchain technologies, digital currencies, securities offerings and litigation, investment funds and financial services.

Citation

Musiala Jr., R.A., Harrington, J.J., Guillén, T.G., Forman, J.A., Gale, A.D. and Reynolds, V. (2020), "Telegram: deconstructing one of the biggest blockchain cases of 2020", Journal of Investment Compliance, Vol. 21 No. 4, pp. 243-253. https://doi.org/10.1108/JOIC-10-2020-0035