The United States Securities and Exchange Commission (SEC) has put a halt to Telegram’s cryptocurrency operation for American investors. 

Following on its widely reported denial of the latest bitcoin ETF proposals, the SEC filed an emergency action and temporary restraining order against messaging giant Telegram’s distribution of its token to US customers.

The SEC’s complaint centers around Telegram using its token GRAM to raise capital in January 2018 as a way to finance its business, which includes the messenger application and TON blockchain. Telegram sold 2.9 billion tokens in its ICO, raising more than $1.7 billion in funding. In addition, 39 US buyers were involved in the original ICO, accumulating more than 1 billion GRAM. 

According to the complaint made on Oct. 11, the US regulatory body considers Telegram’s token to be a security and says the company failed to properly register for the sale of GRAM. 

Stephanie Avakian, co-director of the SEC’s Division of Enforcement, explained in a statement, 

Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold. We allege 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.

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