T Skevington and M Bacina
Telegram opposes SEC motion to compel disclosure of bank records
Updated: Jan 7, 2020
In the latest development in the ongoing case between the US Securities and Exchange Commission (SEC) and Telegram, on 2 January 2020, the SEC filed an emergency motion to compel disclosure of Telegram's bank records showing how Telegram used the funds raised in its Initial a Coin Offering (ICO).
The SEC claims that the information requested is relevant to the ongoing case:
The requested bank records are highly relevant to the issues in dispute in this case, including how much money Telegram has spent, and in what manner, in developing the TON Blockchain, the Telegram Messenger application to be integrated with the TON Blockchain, and related applications
In the motion, the SEC expresses its frustration with a claimed lack of disclosure from Telegram, asserting that it's "request [for documents] had been pending for weeks".
In its response, Telegram claims that:
the production of voluminous and highly sensitive bank records that have little to no bearing on the claims and defenses in this action and would impose undue burdens on [Telegram]...
[the SEC's] letter misconstrues the legal issues in the case and omits critical facts...
Telegram has previously provided significant information regarding the use of funds and has offered to provide more...
Whether or not Telegram produces the requested documents, Pavel Durov, Telegram's designated corporate representative pursuant to Fed. R. Civ. P. 30(b)(6), is scheduled to give sworn evidence on this issue on 7 and 8 January 2020 from Dubai.
This lawsuit continues to be one worth watching closely, but ultimately shows why a sensible and clear legislative framework is so important for ensuring a compliant path forward for cryptocurrencies.