(Bloomberg) -- The Securities and Exchange Commission obtained a restraining order to stop the encrypted messaging app Telegram from flooding the U.S. with digital tokens, claiming that its coins are unregistered securities that can’t be sold to American investors.
The order halts Telegram from selling digital tokens known as Grams, according to a complaint unsealed Friday in federal court in Manhattan.
Telegram raised more than $1.7 billion in 2018, with plans to deliver almost 3 billion Grams to its investors by the end of October of this year. The SEC said the fundraising was illegally marketed in the U.S. because Telegram never registered its offering with the regulator. Telegram raised $424.5 million from 39 U.S. investors, according to the SEC.
The agency has been sounding the alarm about initial coin offerings for years, arguing that most of the tokens involved are securities that must comply with federal regulations. The SEC has warned investors about the risk of buying coins, cautioning that scammers might be using them to lure investors into frauds.
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