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Crypto Wallet Launches Testnet Trades for 300million Telegram Users

Button wallet which happens to be a non-custodial and multi cryptocurrency provider has announced that it is launching a free testing service on the Telegram Open Network (TON) this would be in an effort to further drive the adoption of Cryptocurrency amongst 300 million telegram users.

6.6 testnet of gram tokens have been said to been offered through the client application as giveaways— the native currency of Telegram’s TON blockchain platform — this would be for users that activate its wallet, Forbes reported on Aug, 26.

Bringing in “a TON” of people

The Button Wallet’s co-founder and CEO, Alex Safonov said that the giveaway of the gram tokens is targeted at achieving mass adoption as this would encourage its users to have practical experience of transactions with digital assets with zero risks. He said :

“Cryptos’ biggest obstacle is mass adoption and what we’ve created will help people comfortable with trading cryptocurrency without using real money.”

Safonov also made an indirect reference to the “fanfare surrounding Facebook’s libra digital currency” — a crypto payments network that the social media giant intends to integrate into its widely used apps such as Messenger, WhatsApp, and Instagram.

There has also been anxiety around the apparent bug which has beset pro-democracy activists and Telegram users in Hong Kong, who reportedly fear that the issue could expose them to the Chinese authorities.

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Terrorist Groups Use Telegram for Raising Cryptocurrencies

Terrorist groups, including ISIS, Al-Qaeda, and Hamas, are using several social media platforms, including Telegram, to raise funds via cryptocurrencies.

The Jewish News Syndicate reported that the Washington-based Middle East Media Research Institute (MEMRI) provided evidence of the crypto fundraising via Telegram. MEMRI mentioned that Hamas’ military wing, Al-Qassam Brigades used Telegram, Facebook, and Twitter to ask for supporters to send funds via Bitcoin on January 29th.

Abdallah Al-Muhaysini, a Syria-based jihadi preacher, called out Muslims to support Hamas on Telegram by donating funds using Bitcoin.

The MEMRI team has also been in touch with the US and other western government agencies to brief them on their findings. Telegram’s CEO, Pavel Durov, has received letters from the US Congress to take immediate action against the evidence provided of terrorists using his platform.

Reported by the New York Times, Telegram stated that they could launch its native blockchain Telegram Open Network (TON) and its native crypto within the next two months.

Telegram Goes Public with Involvement in TON Blockchain

Telegram finally acknowledged its involvement in the Telegram Open Network (TON) and Gram. In Telegram’s terms of service on its official website, Telegram mentions the govern of use of the Grams Wallet as well as its involvement with the TON blockchain network.

The terms of service mentions:

“We have no control over the TON Blockchain network and, therefore, cannot ensure that any transaction details that you submit via the Services will be validated and confirmed on the TON Blockchain.”

Telegram stated under ‘use of services’ that it will not keep either personal information of its users nor their public and private keys:

“You are solely responsible for managing and maintaining the security of your Credentials. If you lose your Credentials, we do not have the ability to recover your Credentials or assist you in retrieving your Credentials, and you may not be able to access your Grams. Please note that we do not collect any personal information about you through your use of the Services.”

Although the messaging app has raised $1.7 billion in 2018 to develop the TON blockchain and its associated Gram token, this is the first time Telegram has publicly announced its involvement in TON. The company’s CEO, Pavel Durov, and other company representatives have never announced the project previously.

Earlier this month, Telegram informed investors that the blockchain network would launch in late October, adding that the testing state has been successful.

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Telegram Maintains Gram is not a Security, Urges Court to Deny SEC Action

The United States Securities and Exchange Commission (SEC) seems set on making an example of Telegram, but the fight is far from over. Telegram has asked, in an October 16th filing, the United States of America’s district court for the Southern District of New York to deny the request by the SEC for a preliminary injunction on Gram, Telegram’s native cryptocurrency.

Telegram also urged the court to pass an order that maintains the status quo regarding the offer, sale, or distribution of Grams. In the response filing, Telegram cited the lack of compliance from the SEC into entering into any discussion and believes the SEC is trying to “steamroll Telegram into consenting to a preliminary injunction where there is no need.”

The Counter twist in claims

The move by Telegram to deny these sets of requests by the SEC is in response to a filing by the SEC on October 11, 2019. Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement said;

“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold,” she further maintained “…that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require.”

Telegram has thus responded to this filing by maintaining the position that Gram, though owned by Telegram, is not a security and, as such, should not be subjected to regulations that would be clearly undue.

This investment row between the United States Securities and Exchange Commission and Telegram lies on the premise that Telegram did not register their Gram tokens as securities and based on clearly spelled exceptions governing the investments in securities which Telegram allegedly consented to, the commission is determined to prevent the sale of the tokens who are not licensed to partake in the unlisted security.

Telegram has maintained the position that Gram is merely a currency while telegram Telegram is not an ICO, the firm concluded that there is no need for the Court to enter a preliminary injunction in the filing as it is in compliance to delay the launch of the TON blockchain upon which the Gram currency is built.

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Telegram May Push TON Launch Date Before Facing SEC

After coming under fire from the United States Securities Commission (SEC), Telegram has allegedly informed its investors that it will postpone launching its Telegram Open Network (TON).

According to Cointelegraph, on Oct. 16th Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

The change in plan comes following the SEC’s recent press release that declared that Telegram’s $1.7 billion dollar token offering was illegal and that emergency action and a restraining order had been filed against Telegram. The complaint further stated that the SEC considers tokens to be securities and the Securities Act of 1933 requires all securities to be registered with the SEC, which Telegram had failed to do. Telegram Violated Exemption

In February 2018, Telegram submitted a ‘Form D’ filing, which leverages the exemption 506(c) that allows securities to be sold with registration with the SEC as long as it is exclusively sold to accredited investors.

As the GRM Token assets could be resold by the accredited investors, the SEC interprets Telegram’s actions as a violation of the exemption. The SEC made their issue known in a public complaint which put forward the allegations of Telegram’s and Ton’s failure to register the GRM tokens as a security.

Telegram will respond to the SEC’s allegations in a hearing scheduled for Oct. 24. in New York.

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Telegram Investors Agree Not to Demand Money Back Until TON is Launched

Last week, Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

On Oct. 23, Forbes Russia reported the news, quoting “two sources close to the Telegram team.” The report stated that by majority vote, investors refused to demand a return on the money invested in the project and agreed to wait until the blockchain platform is launched in April 2020.

The change in plan comes following SEC’s recent temporary restraining order against Telegram and TON under “certain emergency relief,” and permanent injunctions, disgorgement with prejudgment interest, and civil penalties.

The court hearing has been previously set in New York on Oct. 24; however, a hearing on the case has now been postponed until Feb. 18-19, 2020. A source close to Pavel Durov, the founder of Telegram, told Forbes that Telegram would announce the decision of the investors today.

Telegram representatives will seek a court decision on the argument that Gram is not a security at the court hearing and sent investors a letter stating that the postponement of the hearing was a positive development.

The letter read:

“The February hearings are different from the earlier scheduled for October 24, because at these hearings they should only consider the possible postponement of the launch of the platform. “We and our advisers will use the time to ensure that at the February hearing the position of Telegram is presented and supported as much as possible.”

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Recap on 2019 Blockchain Use Cases: Who Got Off the Ground?

R3 Corda Closes 2019 with a Bang

Corda is an open-source blockchain platform that enables businesses to transact directly and in strict privacy using smart contracts, reducing transaction and record-keeping costs and streamlining business operations.

In a world of permissionless blockchain platforms, in which all data is shared with all parties, Corda’s strict privacy model allows businesses to transact securely and seamlessly.

According to Yahoo Finance, R3 has closed what it’s calling the largest open-account trade finance trial ever conducted on its Corda platform.

This trial included more than 70 organizations from more than 25 countries. Upwards of 340 participants from those organizations were involved and came out from sectors like financial services, information technology, telecommunications, logistics, the maritime industry, real estate, hospitality, and the automotive industry.

JPM Coin

Banks and financial institutions have gotten further involved in the blockchain space and JP Morgan became the first US bank to create and successfully test a digital coin representing a fiat currency. The JPM coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional clients.

JPM Coin’s primary purpose is similar to a “stablecoin” but used on a business-to-business (B2B) basis rather than a peer-to-peer basis. Corporations deposit fiat currency at JP Morgan in exchange for JPM tokens, which can then be exchanged within a permissioned blockchain. At any time, the tokens can be redeemed for cash via JP Morgan should a client wish to transact outside of the blockchain. To some extent, this is a massively positive step for crypto-adoption. Bitcoin and the cryptocurrencies that have followed in its wake have already revolutionized how we look at money today, and they are continuing to grow in popularity, usage, and value. There is no denying the ideology behind the tech is inspiring, and the surge in adoption is indicative that the idea is catching on.

Facebook’s Lost Libra

Facebook’s Libra project has dominated blockchain headlines this year ever since the social media giant announced the cryptocurrency’s development. The project has faced intense scrutiny for US and European Lawmakers ever since Libra was unveiled to be a stablecoin backed by a select number of national currencies, leading to CEO Mark Zuckerberg being summoned to Capitol Hill for questioning in October.

Libra, is designed as a stablecoin and will be fully backed by a reserve of real assets dubbed the “Libra Reserve”. The trading of Libra is supported by a competitive network of exchanges such as Coinbase.It will be backed by a basket of low-volatility assets, such as short term government securities and bank deposits in currencies from reputable central banks. This is also the major difference between Libra and existing cryptocurrencies which most of them do not have underlying assets. Libra’s white paper claims that it will use “a new decentralized blockchain, a low volatility cryptocurrency, and a smart contract platform” to empower about 1.7 billion unbanked people. This will be achieved through the use of Facebook’s WhatsApp messenger, and Calibra, which is a digital wallet designed for Libra users.

Congress has asked Zuckerberg to pause the further development of Libra to which he has assured his compliance. The scrutiny has led to many of Libra’s original major back to leave the project including Visa, eBay, MasterCard, and PayPal. Things do not look likely to improve any time soon as just last month the Governor of the Federal Reserve, Lael Brainard warned a European Central Bank (ECB) forum in Germany, that the risks posed by the potential mainstream adoption of Facebook’s proposed Libra, are too immense.

Telegrams Violated Exemption

Telegram’s TON has also had an interesting 2019. After coming under fire from the United States Securities Commission (SEC), Telegram has allegedly informed its investors that it will postpone launching its Telegram Open Network (TON).

According to Cointelegraph, on Oct. 16th Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

The change in the plan came following the SEC’s press release that declared that Telegram’s $1.7 billion dollar token offering was illegal and that emergency action and a restraining order had been filed against Telegram. The complaint further stated that the SEC considers tokens to be securities and the Securities Act of 1933 requires all securities to be registered with the SEC, which Telegram had failed to do.

The majority of investors of the Telegram Open Network (TON) in the $1.7 billion Gram token sale have voted against the return of their funds and agreed to postpone the launch of the blockchain network. Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

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Telegram Resists the SEC Court Order to Reveal Financial Details of 2018 ICO

A recent court filing initiated by the United States Securities and Exchange Commission (SEC) compels Telegram to reveal bank records and other transactional documents showing how the raised funds have been used in the last two years.The filing stated: “Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case, Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”

In the early sale rounds in 2018, Telegram raised $1.7 billion for the development of its TON blockchain. It is worth noting that the company advised investors against participating in the rounds, yet many of them were able to access the tokens through external parties before the launch of Telegram’s blockchain.The SEC summoned the company to court for alleged claims that the tokens fell under the category of securities, which the company failed to make known to the regulators. As a result of this lawsuit, the company has equally been compelled to delay the release of its blockchain launch.

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Telegram to Release Financial Statements to the SEC in Gram Token ICO Case

The United States Securities Exchange Commission (SEC) has asked Telegram to release its financial statements, which includes bank records, as the regulator believes will prove the misconduct in the $1.7 billion offering of Gram tokens.

According to the filing on Jan. 13, by the international privacy laws and the new information with the court of the Southern District of New York (SDNY), Telegram has been given until Feb. 26 to make the bank records available; the court has denied SEC of this record in a previous ruling based on a privacy concern.

The ruling will allow Telegram to release a censored copy and provide it to the court, this would be done in accordance with foreign privacy regulations. According to the letter sent from the attorney for the defense to the court, Telegram will provide a redacted record on Jan. 15 before submitting them to the public record while a full copy would be made available to the SEC. All eyes will be on the next move to be made by the SEC, as Telegram’s attorney has agreed to make available these records available as it would serve as a bellwether of what they do or do not find in the new documents.

Philip Moustakis, an attorney with Seward and Kissel and formerly the senior counsel at the SEC said that they will be alerted to pick up any evidence of Telegram’s failure to exercise reasonable care to ensure that the purchasers were not acting as underwriters.

This case between SEC and Telegram started on Oct. 11, 2019, the SEC had filed an emergency action as it demanded a cease-and-desist in Telegram’s ICO. The SEC had referred to the sale of the Gram tokens as securities offerings that are not registered, meanwhile, Telegram had argued that saying that it had met all the requirements to register as such an offering under Regulation D.

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SEC Fights Telegram on Gram Token Sale at US Court Battle

The cryptocurrency and blockchain community have been closely watching the court case between the United States Securities and Exchange Commission and Telegram over the legality of the latter’s $1.7 billion token offering.

Judge P. Kevin Castel of the US District Court for the Southern District of New York started the hearing by stating that both the SEC and Telegram should “consider the economic realities” of the $1.7 billion token sale. The judge added that the disclaimers do not control how the court views the digital asset.

When Pastel questioned the utility of the tokens sold in the first round, Telegram’s attorney assured the court that the testnet blockchain had sufficient interest in the blockchain from the “decentralized community.”

The suit was brought against Telegram last October from the SEC, as the regulator believes that Telegram violated the Securities Act of 1933 with its token offering by not adhering to the registration requirements.

Since the SEC considers tokens to be securities and the Securities Act of 1933 requires all securities to be registered with the SEC. Telegram and TON failed to register their sale of Gram tokens, and the SEC considers the sale to be “unlawful.” The complaint reads, “Telegram committed to delivering Grams to the Initial Purchasers in conjunction with the launch of the TON Blockchain by no later than Oct. 31, 2019, and it plans to sell millions of additional Grams at the same time.”

SEC senior trial attorney Jorge Tenreiro argued that Gram tokens were sold to investors without any utility. The SEC claims that the transaction was a “straightforward capital raise.”

Although Judge Castel referred to Telegram’s Gram token sale to gold, stating that the seller of the precious metal would not ask the investor if they were interested in the gold before the transaction, leaving some investors with doubts.

Telegram’s lawyer, Alexander Drylewski said that the SEC’s Howey Test, a test designed to categorize securities does not apply to digital assets that are offered with a promise of managerial oversight, that will increase their value over time. The lawyer argued that when TON blockchain launches, Grams will not be securities.

Castel concluded judgment on the preliminary injunction, and assured Telegram’s lawyer there would be a judgment in the case before April 30, when the TON blockchain is expected to be launched.

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