Telegram decided to provide the records to the United States Securities Exchange Commission which they believe will prove the misconduct in the $1.7 billion offerings of the gram tokens as we are about to read further in the crypto news.
According to a January 13 filing with the court of the Southern District of New York, Telegram decided to provide the court with the bank records after they initially denied to do so in an earlier ruling that was based on the privacy concerns. Today’s ruling, however, will allow telegram to redact the information provided to the court in accordance with the foreign privacy regulations. The letter by the court from the attorneys in defense, Telegram is founded in Russia by Pavel and Nikolai Durov and Is now based in Berlin, so Telegram decided to provide the SEC with the bank records only by redacting them before submitting them to the public.
The fact that the attorneys of Telegram agreed to provide the SEC with full bank records and the public will also have access to redacted versions, means that all eyes will be on the SEC’s next move and we are about to see what they will do or find in the documents. Philip Moustakis who is an attorney with the Seward and Kissel group, and a former counsel at the SEC, explained that the SEC will be on alert for further evidence of Telegram’s ‘’failing to exercise reasonable care to ensure that the purchasers were not acting as underwriters.’’
The SDNY denier the SEC’s original request at first for information earlier in January but did so ‘’without prejudice’’ leaving the subject open to further discussion. The SEC produced invoices from the alleged underwriters to the sale of the Gram tokens of Telegram that the SEC believes demonstrates offering of the tokens outside of their approved level. The saga with the US regulator continues and the messenger services started in earnest back in 2019 when the SEC filed an emergency action demanding a cease and desist order for Telegram. The SEC called the sale of the gram tokens unregistered security offering while Telegram argued that it qualified under the Regulation ID exemptions for the requirement to register such an offering.
The SEC has been examining opportunities to adapt its exemptions which are heavily dependent on making offerings to accredited investors for who the law does not require the same degree of regulatory protection.
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“As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed defendants to take over $30 million from investors’ pockets.”Also, today we saw that the US Attorney's Office for the District of New Jersey announced criminal charges against Manor and Pardo in a parallel action. The SEC now seeks disgorgement of illegally obtained profits plus interest, penalties and injunctive relief as well as barring Manor and Pardo from acting as officers or directors of public companies and from participating in future securities offerings.Meanwhile, history shows that Manor received a four-year prison sentence in Canada in 2012 for siphoning $106 million from a Toronto-based hedge fund that he co-founded. The Canadian fund had $800 million in assets under management at its peak from 26,000 different investors.
Canadian Regulator Issues New Guidance For Crypto Exchanges
“Potentially, there will be ongoing reliance and dependence of the user on the Platform until the transfer to a user-controlled wallet is made. Until then, the user would not have ownership, possession and control of the crypto assets without reliance on the Platform. The user would be subject to ongoing exposure to insolvency risk (credit risk), fraud risk, performance risk and proficiency risk on the part of Platform," the guidance reads.As it stands, the CSA will not apply securities laws to crypto exchanges on which the underlying crypto asset is not a security or derivative. Crypto assets are also delivered to a user immediately.Before this, we could see that state and provincial securities regulators in the United States and Canada launched probes into potentially fraudulent crypto investment programs as part of the North American Securities Administrators Association (NASAA) named "Operation Cryptosweep." This initiative resulted in hundreds of investigations of initial coin offerings (ICOs) and crypto related investment products.In late December 2019, the NASAA also said that crypto investment is among the top five investor threats for 2020. The Canadian regulator does not clearly think about this in the same way. Still, the NASAA said that "it is important for investors to understand what they are investing in and who they are investing with."
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The team was aware of the chances of double-spending which could have caused withdrawals from other exchanges which will end up depleting the wallets. Fabian added that the team didn’t warn its supporters of the risks. The BitGrail exchange was one of the few that listed NANO during its early days and became the adopter who required buying coins on the exchange exposing the traders to risks. The exchange and the founder Francesco Firano were found guilty of not disclosing the double-spending but the team of the platform is now facing a class-action lawsuit as well because it was partial to the loss of the coins. In the end, it turned out that the funds were taken away because of a glitch that served a lot of withdrawals because of the increased activity and requests from the Nano nodes.The Nano project which distributed coins through a faucet and moved into the next stage with exchange listings and the prevalence of BitGrail deposits was not unusual for the coin in its early stages. The platform took its time to bring out a working wallet and caused the users to store funds on the exchange and there was a lot more practice of keeping the coins on exchanges to avoid supporting too many wallets but it had the opportunity to trade in the same time.
‘’Such boilerplate purported defenses are not proper affirmative defenses, are not pleaded with sufficient particularity to give plaintiff notice of their bases, and are not supported by any facts or explanations as to how they apply to this case.’’
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