6 ms·

The "anywhere" thing is weird though as these people don't live in the United States, so the analogy is that you are a Russian citizen living in Europe and you

by saurik 7y ago

The "anywhere" thing is weird though as these people don't live in the United States, so the analogy is that you are a Russian citizen living in Europe and you buy a plot of land; now, the US government tells you you aren't allowed to tell people in Europe that you maybe have a gold mine and maybe they should invest in shares of your gold, because, in the case that you do find gold, someone in the United States might one day buy some of it, which is actually kind of ridiculous on not just one but two levels: that the US has jurisdiction over your behavior at all when you aren't yourself a US citizen, you don't live in the US, and you aren't even dealing with other US citizens, because theoretically the people you deal with might one day themselves deal with US citizens (which is an analysis I am just believing from this article: I haven't read the actual complaints from the SEC); but also the very idea that the US thinks that the shares of future gold that may or may not exist might still be a security even after you find the gold (assuming you map it out and know how much exists after you find it, which I think is a reasonable analogy for a post-launch distributed protocol project) because of this weird theory that they sometimes have that "once a security always a security" (which is based on some context I have outside of this article).

vorpalhex 7y ago
That's not quite right. Imagine you're a Russian citizen living in Russia proper, and you want to sell prospective stakes. Russia rules that you can't do this because you're not accredited, and you're asking people to buy a kind of security. You then ask if you can sell your security to people in the UK. Russia repeats itself, more slowly this time: No, you're not accredited and you're trying to sell a security - stop it. So then you explain, "but this isn't just a security, it's a decentralized open security based on cryptographic principles and new technologies and there's computers involved!" And then Russia repeats itself once more, "No, you're not accredited, it's still a security, what part of this is hard to understand?"
- saurik 7y ago
  I feel like our disagreement here is based on a different understanding of a fact that I might legitimately have wrong: my understanding is that the owners of Telegram are literally Russian citizens living in Europe; are they actually US citizens? (FWIW, a quick re-check of Wikipedia to verify my memory here is definitely making it sound like the Durov brothers are Russian nationals, but maybe they have now become official citizens of an island in the Caribbean as part of their "self-exile"? I don't think that Saint Kitts and Nevis is a US territory, though.)
  - vorpalhex 7y ago
    As far as I understand it, they're doing this under the Telgram brand, but it's effectively whatever organization "owns" the TON effort and where they are incorporated. It looks like there are at least two "Telegram" orgs, one located in the UK (according to the Bloomgberg profile), and I'm not clear if this other one is in the US or somewhere in the EU. There's an issue if they're offering a security (which they basically are). They could make that security available through a foreign regulated market legally, but they can't allow "the world" to buy it. If they could restrict purchasing with a legal framework then they may be able to resist the judge's orders that forces them to never sell it. But yes, US anti-money laundering law is some very intense stuff.
  - tw04 7y ago
    Except they didn't want to sell to Russia or Europe. They ALREADY sold to institutional investors in the US and wanted more. But they were attempting to not be subject to the SEC. Not gonna happen. https://www.reuters.com/article/legal-us-otc-telegram-idUSKBN21C3N0 https://www.reuters.com/article/legal-us-otc-telegram-idUSKB...
    - ricardobeat 7y ago
      > The developers spent $405 million, according to Judge Castel, to develop the new open-source blockchain O.o
      - davidgerard 7y ago
        That's not quite right - they did say in the original offering that they would be spending investors' money on Telegram Messenger's daily operations. The judge's words are: > Telegram subsequently report ed that, from January 2018 to January 2020, it spent $405 million, about 24% of the proceeds from the offering of Grams, on the development of the TON Blockchain and the operations of Messenger. https://www.courtlistener.com/recap/gov.uscourts.nysd.524448/gov.uscourts.nysd.524448.227.0.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.524448...
  - Reelin 7y ago
tptacek 7y ago
The US nexus was established pretty firmly early on in the case: they knowingly sold over $1B USD in "private placements" to US investors, and used US banks. Later, in March-April, after failing to stop the injunction, they attempted to pivot to overseas sales only. But the instruments they're selling are, of course, designed to be liquid and (asymptotically approaching) anonymous; not only that, but the original contracts they had built the offering on might not even have allowed them to fence off US investors even if the capability existed. The "we'll just sell grams overseas" bit was a Hail Mary pass, performed after they'd already lost the core of their case.

by saurik 7y ago

vorpalhex 7y ago

That's not quite right. Imagine you're a Russian citizen living in Russia proper, and you want to sell prospective stakes. Russia rules that you can't do this because you're not accredited, and you're asking people to buy a kind of security. You then ask if you can sell your security to people in the UK. Russia repeats itself, more slowly this time: No, you're not accredited and you're trying to sell a security - stop it. So then you explain, "but this isn't just a security, it's a decentralized open security based on cryptographic principles and new technologies and there's computers involved!" And then Russia repeats itself once more, "No, you're not accredited, it's still a security, what part of this is hard to understand?"

saurik 7y ago
I feel like our disagreement here is based on a different understanding of a fact that I might legitimately have wrong: my understanding is that the owners of Telegram are literally Russian citizens living in Europe; are they actually US citizens? (FWIW, a quick re-check of Wikipedia to verify my memory here is definitely making it sound like the Durov brothers are Russian nationals, but maybe they have now become official citizens of an island in the Caribbean as part of their "self-exile"? I don't think that Saint Kitts and Nevis is a US territory, though.)
- vorpalhex 7y ago
  As far as I understand it, they're doing this under the Telgram brand, but it's effectively whatever organization "owns" the TON effort and where they are incorporated. It looks like there are at least two "Telegram" orgs, one located in the UK (according to the Bloomgberg profile), and I'm not clear if this other one is in the US or somewhere in the EU. There's an issue if they're offering a security (which they basically are). They could make that security available through a foreign regulated market legally, but they can't allow "the world" to buy it. If they could restrict purchasing with a legal framework then they may be able to resist the judge's orders that forces them to never sell it. But yes, US anti-money laundering law is some very intense stuff.
- tw04 7y ago
  Except they didn't want to sell to Russia or Europe. They ALREADY sold to institutional investors in the US and wanted more. But they were attempting to not be subject to the SEC. Not gonna happen. https://www.reuters.com/article/legal-us-otc-telegram-idUSKBN21C3N0 https://www.reuters.com/article/legal-us-otc-telegram-idUSKB...
  - ricardobeat 7y ago
    > The developers spent $405 million, according to Judge Castel, to develop the new open-source blockchain O.o
    - davidgerard 7y ago
      That's not quite right - they did say in the original offering that they would be spending investors' money on Telegram Messenger's daily operations. The judge's words are: > Telegram subsequently report ed that, from January 2018 to January 2020, it spent $405 million, about 24% of the proceeds from the offering of Grams, on the development of the TON Blockchain and the operations of Messenger. https://www.courtlistener.com/recap/gov.uscourts.nysd.524448/gov.uscourts.nysd.524448.227.0.pdf https://www.courtlistener.com/recap/gov.uscourts.nysd.524448...
- Reelin 7y ago

tptacek 7y ago

The US nexus was established pretty firmly early on in the case: they knowingly sold over $1B USD in "private placements" to US investors, and used US banks. Later, in March-April, after failing to stop the injunction, they attempted to pivot to overseas sales only. But the instruments they're selling are, of course, designed to be liquid and (asymptotically approaching) anonymous; not only that, but the original contracts they had built the offering on might not even have allowed them to fence off US investors even if the capability existed. The "we'll just sell grams overseas" bit was a Hail Mary pass, performed after they'd already lost the core of their case.