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U.S. Court Requests Advice from CFTC: SEC vs Telegram

United States District Judge, P. Kevin Castel has issued an order to the Commodity Futures Trading Commission (CFTC) requesting an official statement that may contribute to the ongoing case of Securities and Exchange Commission (SEC) vs Telegram Group, Inc..

In this case: the Securities and Exchange Commission is the ‘plaintiff’, whilst Telegram Group, Inc., et al are the ‘defendants’.

According to the official document filing, the CFTC has been:

“respectfully invited to express its views on the issues presently before the Court in the above-captioned action in which its interests may be implicated.

“Leave is granted to file a written submission, which may take the form of a letter.”

P. Kevin Castel – United States District Judge, United States Southern District Court of New York

If this invitation is accepted by the CFTC (which has the right to defer judgement), this would mark one of the first times that more than one federal regulatory financial authority would have publicly worked together, or at least have their verdict on a single case be directly juxtaposed.

According to the official website, the mission statement of the CFTC is to “promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation”. This compliments its vision statement, which is to “be the global standard for sound derivatives regulation”.

Its core values include: Commitment, Forward-thinking, Teamwork, and Clarity.

Other federal U.S. authorities with legislative powers and responsibilities pertaining to distributed-ledger digital assets include the Financial Action Task Force (FATF), and the Financial Crimes Enforcement Network (FinCEN).

This case began back last year and was instigated by the SEC against Telegram, and was subsequently escalated to the District Attorney’s office.

The SEC continues to allege that not only did the ICO sale undertaken by Telegram (raising funds towards its TON network and Grams token) represent an unregistered sale of ‘financial securities’ investment, but that the team additionally continued to sell these ‘securities’. Far beyond the stipulated dates of public sale.

On January 13: the very same court (United States Southern District Court of New York) upheld a much-discussed & bold-faced refusal made by Telegram against a demand made by the SEC for full disclosure of private banking records.

Whilst Telegram has mostly been publicly silent regarding the case, it hasn’t been shy to reveal details of the underlying technology behind its blockchain solution.

On February 5, 2020, in spite of the highly public legal battle against the SEC, Telegram released a technical whitepaper for its ‘Catchain Consensus’ Byzantine Fault Tolerant (BFT) blockchain protocol. This protocol, according to the whitepaper, was specifically crafted for block generation and validation on the TON Blockchain.

Telegram describes itself as:

“a messaging app with a focus on speed and security, it’s super-fast, simple and free. You can use Telegram on all your devices at the same time — your messages sync seamlessly across any number of your phones, tablets or computers.”

Telegram (official website)