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ARTICLE · 20 APRIL 2020

SEC Wins Preliminary Injunction Barring Distribution Of Telegram's Cryptocurrency

Pryor Cashman LLP
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A federal judge in New York has adopted a controversial position advocated by the U.S. Securities and Exchange Commission that threatens to eviscerate the ability of sellers of cryptocurrency tokens

United StatesTechnology
Jeffrey Alberts
Jeffrey Alberts
Matthew Barkan
Matthew Barkan
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A federal judge in New York has adopted a controversial position advocated by the U.S. Securities and Exchange Commission that threatens to eviscerate the ability of sellers of cryptocurrency tokens to rely on representations made to them by even the most sophisticated of purchasers. On March 24, Judge P. Kevin Castel of the Southern District of New York issued a decision that treated sophisticated venture capital firms and high net worth individuals who initially purchased a cryptocurrency known as "Grams" from Telegram (the company behind the popular Telegram Messenger application) as "underwriters" that were used to redistribute Grams to the public, despite the fact that Telegram did not ask these purchasers to redistribute the Grams, but rather required the purchasers to represent that they were not purchasing the cryptocurrency for redistribution. 

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