March 25, 2020 US Judge issues injunction on next month’s Telegram token issuance, following a request from the SEC.

A US District Judge for the Southern District of New York issued an injunction on Tuesday, ordering the messaging service, Telegram, to cancel its planned token issuance that was scheduled for April. Although the injunction is temporary, the judge stated that the SEC had made a reasonable case that Telegram had conducted an unregistered securities sale. The SEC had previously sued Telegram in October 2019 over what it believed to be Telegram’s violation of federal securities law as part of its $1.7 billion token sale in early 2018. Judge P. Kevin Castel elaborated that the regulator had shown to a reasonable degree that the tokens that were sold in secondary markets would benefit from the actions of Telegram, a key parameter of the Howey Test, for assessing whether an asset constitutes a security.