Telegram told investors it was using Wall Street megabanks BNY Mellon and Credit Suisse to move and store fiat currency raised in last year’s blockchain token sale, court filings show.
On Monday, the Securities and Exchange Commission (SEC) filed a proposed order with the U.S. District Court for the Southern District of New York to request the British High Court’s assistance in getting the testimony of Telegram’s former chief investment advisor, John Hyman.
It followed a similar filing on Friday from the SEC, which has accused Telegram of selling unregistered securities and is seeking to halt the issuance of the Telegram Open Network (TON) project’s tokens.
Attached to the new document are Telegram messenger exchanges between Hyman and some of the investors who were negotiating the purchase of the tokens, known as grams, that would run on the TON blockchain.
During one such chat, Telegram employee Shyam Parekh explained to an investor how the funds were supposed to reach the company.
“We will receive the funds through BNY, which will forward the funds to CS (Schweiz) AG for final credit to Credit Suisse AG,” Parekh wrote, providing the international bank code for wiring money to Credit Suisse via the Swift network.
BNY Mellon and Credit Suisse declined to comment. It’s not clear from the filing whether the investor Parekh was communicating with used either bank to send funds to Telegram.
Their apparent involvement is notable since few financial institutions have been eager to work with cryptocurrency startups and projects, due to perceived reputational and compliance risks. However, Telegram was an established company before it embarked on the TON project.
Further, BNY Mellon and Credit Suisse have been dipping their toes into the shallow end of the crypto pool.
In April BNY partnered with Intercontinental Exchange’s bitcoin futures subsidiary Bakkt to set up “geographically-distributed” private key storage. Credit Suisse hosted a full-day symposium on digital assets at its New York office last month. Both banks are members of Fnality, the consortium building a “utility settlement coin.”
Further details of Telegram’s $1.7 billion fundraise also became public thanks to the filing, such as some new investors’ names and the amounts they invested.
In particular, message exchange between Telegram employees and several U.S.-based investment funds reveals that Kleiner Perkins, in particular, secured a $30 million confirmed allocation of grams, Lightspeed China, the regional arm of Lightspeed Ventures, invested $25 million and FBG Capital put in $10 million.
A bunch of smaller investors were approved to get in via a California-based fund managed by Elysium Ventures, the messages show. The list includes tech industry celebrities such as WordPress creator Matt Mullenweg, Foursquare co-founder Naveen Selvadurai, co-founder and CEO of f Yelp Jeremy Stoppelman, True Ventures partner Om Malik, former TechCrunch co-editor-in-chief Alexia Bonatsos (who runs her Dream Machine fund), founder of the mobile commerce platform Karma Lee Linden and the Hong Kong fashion billionaire Silas Chou.
Elysium’s fund agreed to invest $12 million in total, according to messages between the fund’s managing partner Nikolai Oreshkin and John Hyman.
Answering a question about “where’s all this $ coming from” to Telegram in another chat, Hyman said “big Russia, CIS bid, quite a lot in Israel and Pavel fan club.” Pavel Durov is Telegram’s secretive CEO; the Commonwealth of Independent State (CIS) is an association of former Soviet republics, including Russia.
On Friday, the SEC asked the court to request the help of the High Court of England and Wales to help obtain Hyman’s testimony and documents related to Telegram’s token pre-sale. The court has previously ordered the deposition of Telegram’s CEO Durov, vice president Ilya Perekopsky and investor relations officer Shyam Parekh
The court will hear the SEC and Telegram discuss whether gram is an unregistered security on Feb. 18-19.
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