The ruling against Telegram obliterates private sale of tokens as a method of financing public blockchain projects, further stymying crypto innovation in the US
Josh Lawler is a partner at Zuber Lawler, which focuses on mergers & acquisitions, securities law and technology transactions.
Context & Ripple Effects
The arc here runs from 2018, when Telegram canceled the public tranche of its ICO after raising $1.7B from 175 accredited investors in private deals, to the NY federal court's preliminary injunction finding that distributing Gram tokens to those investors likely violates securities law. Josh Lawler's argument is that the injunction doesn't just block one deal — it closes the private-sale route that US blockchain projects had been using as their financing workaround.
The stakes are structural rather than Telegram-specific: the same enforcement theory was later validated against LBRY's token, and Telegram itself ultimately abandoned TON entirely rather than fight the SEC's position, which suggests the ruling's chilling effect outlived the case.
First-order effects
- Telegram's 175 accredited investors are locked into a token the court has barred from distribution, and the company's planned TON network launch is effectively dead in the US.
- Every US blockchain project counting on private placements to fund a public token launch loses that financing path immediately — the injunction sets the template other courts and the SEC can apply.
Second-order effects
- Token issuers are pushed toward offshore launches or registered offerings, shifting deal flow and legal work to jurisdictions outside the SEC's reach.
- The SEC gains a proven litigation playbook: the same theory that beat Telegram was used to win against LBRY, lowering the cost of pursuing the next token issuer.
Third-order effects
- If case-by-case enforcement keeps substituting for rulemaking, US token financing consolidates around registered offerings and offshore issuance, with the SEC's lawsuit record — not legislation — defining what a legal token sale looks like.
The trend: US securities enforcement is closing off token-issuance financing channel by channel, pushing blockchain capital formation offshore while courts, not Congress, set the rules.