The United States District Court for the Southern District of New York has granted a request by the Securities and Exchange Commission (SEC).

At the hearing, District Judge P. Kevin Castel said:

The Court finds that the SEC has shown a substantial likelihood of success in proving that the contracts and understandings at issue, including the sale of 2.9 billion Grams to 175 purchasers in exchange for $1.7 billion, are part of a larger scheme to distribute those Grams into a secondary public market, which would be supported by Telegram's ongoing efforts.

Thus, the court granted the petition of the US regulator, who considered that Pavel Durov’s company violated federal law:

Considering the economic realities under the Howey test, the Court finds that, in the context of that scheme, the resale of Grams into the secondary public market would be an integral part of the sale of securities without a required registration statement.

District Judge P. Kevin Castel also added that there is a difference between the securities that Telegram’s customers bought during the ICO and the issued Gram tokens, thus disagreeing with the arguments of Durov’s lawyers. According to the SEC, Telegram creates an “artificial” difference between the purchase of Gram and its delivery to customers.

Anton Rosenberg, former technical director of VKontakte, said that the situation has worsened since the SEC appeared. He said that there’s a risk that Telegram will be obliged not only to return all the money but also to pay a fine. It seems like Durov does not have the required sum of money, so he might eventually sell Telegram. The only question is who and for how much will be ready to buy it.

We want to remind you that at the last hearing, the SEC gave additional arguments against Telegram.

The final verdict will be issued on April 30, but there are almost no chances that the outcome will be successful for TON. If the court finally prohibits the release of the blockchain, the Durovs will have to return $1.7 billion to investors, as well as pay a huge fine.