SEC Commissioner Peirce Blasts Regulator's Action Against Telegram

"Crypto Mom" took no prisoners in her fiery rebuke of the SEC's Telegram action.

Jul 21, 2020 at 2:13 p.m. UTC
Updated Sep 14, 2021 at 9:33 a.m. UTC

U.S. Securities and Exchange Commissioner (SEC) Hester Peirce on Tuesday criticized her colleagues' decision to penalize Telegram's initial coin offering in remarks that underscored the maverick regulator's open-arms approach to crypto.

  • Peirce, whose liberal fintech stances have earned her the nickname "Crypto Mom," told Blockchain Association Singapore the SEC fundamentally erred in prosecuting and punishing Telegram's gram token sale, which raised $1.2 billion in now-forfeited funds for the messaging app as per a settlement last month.
  • In her view, Telegram's decision to sell grams under a "Simple Agreement for Future Tokens" offering structure should have protected the project from securities violations. But, as she pointed out, the SEC saw it differentl, and worked to convince a court that the agreements for future gram tokens counted as securities.
  • "I do not support the message that distributing tokens inherently involves a securities transaction. What the SEC’s Telegram complaint cast as evidence of an illegal securities offering – that 'the project would require ‘numerosity’: a widespread distribution and use of grams across the globe,' I see as a necessary prerequisite for any successful blockchain network," she said.
  • Peirce again called for a "safe harbor" that would give certain token projects three years to experiment while regulators retooled their framework for what is and is not an investment contract.

UPDATE: 7/20/2020 20:55 UTC: An earlier version of this article misspelled the SEC Commissioner's last name as "Pierce."

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