Telegram is seeking to entreatment a United States federal court's recent ruling in favor of the Securities and Substitution Commission to halt distribution of GRAM tokens.

Rejection of the injunction and the status of the investment contracts

In response to the court'southward preliminary injunction earlier the same twenty-four hour period freezing GRAM issuance until at least the trial, Telegram filed a brief notice of entreatment with the Court of Appeals for the Second Circuit.

The injunction itself tentatively agrees with the SEC's statement that the contracts governing GRAM issuance — though critically, not necessarily GRAM tokens themselves — seem to qualify as securities under the Howey exam:

"For reasons that will be more fully explained, the Court finds that the SEC has shown a substantial likelihood of success in proving that Telegram's present program to distribute Grams is an offering of securities under the Howey exam to which no exemption applies."

This is bad news for Telegram in advance of the trial.

What are the appeal'due south chances and what does this mean for the instance?

At to the lowest degree one commentator was not optimistic about Telegram'south chances in their appeal. Philip Moustakis, attorney at Seward & Kissel LLP and quondam SEC counsel, told Cointelegraph that Telegram'due south legal team will have their work cut out for them before the courtroom of appeals:

"The standard of review on appeal is abuse of discretion — it's a loftier bar — meaning Telegram will have to show the district court made some articulate fault of fact or an error of police."

Telegram's distribution of GRAMs has been on hold since the SEC'south emergency action in Oct, in which the regulator deemed the $1.seven billion initial coin offering to exist an unregistered and therefore illegal securities offering.

Cointelegraph reached out to Telegram'southward legal team but had received no response equally of printing time. This article will be updated in the result that comment comes in.