Abstract
On Thursday January 7, 2021, the total market capitalization of cryptocurrencies exceeded $1 trillion USD, and by early April 2021 the total exceeded $2 trillion. While Bitcoin accounts for most of these amounts, the significance of this milestone is hard to overstate. The exponential growth of the crypto market, at a minimum, signals increasing acceptance of the new asset class by a growing number of investors. At the same time, however, U.S. regulators not only continue to be aggressively hostile to crypto, the Securities and Exchange Commission (SEC), in particular, has successfully pushed to have its approach imposed world-wide. On April 1, 2020, the SEC won a remarkable victory in its case against Telegram Group Inc., a social media company domiciled in the United Kingdom and headquartered in the United Arab Emirates, obtaining a global injunction against the planned issuance of a new cryptoasset that would have been called Grams. Despite the fact that a majority of the early investors were located outside the U.S. and in the face of offers from the company to refund the purchase price to American investors and direct all future efforts at overseas investors, a judge in the Southern District of New York imposed a global ban on the future sale of Grams, leading Telegram to discontinue its entire offering. This Article questions both whether this result was necessary under existing precedents applying U.S. securities laws to sales to noncitizens located elsewhere in the world and whether, assuming the result was legally proper, it is a desirable outcome. After considering the potential benefits and disadvantages of a global enforcement approach in the context of cryptoassets and transactions, this Article suggests a range of potential alternatives to the result reached in SEC v. Telegram.
Recommended Citation
Goforth, Carol R.
(2022)
"SEC v. Telegram: A Global Message,"
University of Memphis Law Review: Vol. 52:
Iss.
1, Article 5.
Available at:
https://digitalcommons.memphis.edu/um-law-review/vol52/iss1/5
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