Thread by @avichal

1/ I read the SEC's filing against @telegram. Most of the summaries I've seen miss the crux of the filing.

The filing focuses on GRAMs as a security because Telegram Inc. controls TON and fundraised for its Messenger in addition

My read of the SEC's Telegram filing (IANAL)👇

2/ The SEC is being consistent, focusing again on the Howey test:
A/ investment of $
B/ in a common enterprise
C/ with the expectation of profit
D/ based on the efforts of others

A - obviously
C - VCs want a profit

The crux of it is B/ common enterprise and D/ efforts of others

3/ Check out how they repeatedly assert Telegram Inc. and the Durovs control everything, thus this is a common enterprise driven by the managerial efforts of others.

Ex: "Pavel and Nikolai Durov will be or are the sole members of the TON Foundation’s board" and many more

4/ more..."depends solely on Telegram's ability to create and launch the network"

And they state repeatedly that Telegram Inc benefits from this fundraising directly:

"estimating Telegram would spend $520M on Messenger alone between 2019 and 2021" (stated in multiple ways)

5/ "Defendants would use the Offering proceeds to finance Defendants' businesses"

"Telegram stated that the remaining Grams would be reserved for its development team"

"Telegram intends 'to use proceeds'...for the continued development of Telegram Messenger."

6/ and more..."Also to invest in Messenger itself"

"Telegram's financial interests would be aligned with investors'"

"[i]ntegrated in to Telegram's applications, the TON wallet should become the world's most adopted cryptocurrency wallet"

7/ and more! "As evidenced by the Offering Documents, Telegram engaged in a coordinated, centralized effort to create the Durov's vision of a new, scalable blockchain."

"Durovs as its sole directors, Telegram will have complete authority over all TON Foundation activities"

8/ The SEC went to town on the assertion that Telegram actually raised money to benefit Telegram Messenger, Telegram controls the TON Foundation, and the only people building TON are Telegram employees.

Thus, it is a common enterprise and profits are driven by efforts of others

9/ It seems to me the SEC is being quite consistent.

For the same reasons ETH is not a security (Ethereum is sufficiently decentralized so there is no common enterprise) GRAMs are a security (Telegram is a clear common enterprise with clear managers driving GRAM value)

10/ And no this is not the death of the SAFT. They barely mention it. They consistently have focused on Howey, regardless of SAFT, ICO, or other mechanisms.

If you think tokens are like pre-selling airline miles to bootstrap an airline, then your fight is not with the SEC anyway

11/ This leaves open the big question of how to launch a project, financed via SAFT or otherwise, that is "sufficiently decentralized" by token generation with regard to development team, validators, token distribution, etc.

It's obviously not easy and IANAL, but I am optimistic

12/ Some issues the SEC highlights that other projects will try to avoid in the future:
A/ Don't have the company and foundation controlled by the same people
B/ Don't use funds to finance an existing company
C/ Don't have only company employees committing code

13/ Other projects will likely:
D/ Have others outside the entity that raised funds building apps on the chain
E/ Try to have use cases at launch so there is utility, rather than future utility
F/ Avoid promising investors a return
G/ Avoid conversations with exchanges altogether

14/ Obviously this is not legal advice of any sort.

And it is not crazy to imagine avoiding all of the issues the SEC has with Telegram, yet the SEC still asserts a token is a security because of Howey - most likely because of the common enterprise and efforts of others pieces

15/ Read the full filing. It's short and a good read.
sec.gov/litigation/com…

And in case it was not clear, I am not a lawyer and this is not advice to anyone about what to do/not do.

To real lawyers, please correct any of the above if I misunderstood the filing in any way