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Pavel Durov Gave Deposition Regarding The Company’s Alleged Violation Of US Securities Law

Pavel Durov, the CEO of Telegram, gave a deposition regarding the company’s alleged violation of United States securities law by conducting a $1.7 billion Gram token sale in 2018.

Telegram CEO’s 18-Hour Deposition Transcript Is Published Online — Crypto World News (@cryptoworldnews) January 18, 2020

It has been reported that the deposition was held on January 7 and 8 before a court reporter designated by the court reporting service engaged by the plaintiff represented by the United States Securities and Exchange Commission (SEC).

According to the official transcript document, the deposition was held in Dubai and involved Alexander Drylewski, the lawyer of Telegram; and Jorge Tenreiro, the SEC official.

It has also been reported that the first part of the deposition on January 7 started at 11:21 AM to end at 10:00 PM, while the second one on January 8 was a bit shorter, beginning at 10:23 AM and ending at 06:09 PM, local time.

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However, the deposition was videotaped, while the available official transcript record is fragmented, with significant parts of the deposition having been omitted supposedly for the sake of confidentiality.

During the deposition, which combined took around 18 hours with breaks, the SEC questioned Telegram extensively on the company’s expenses and funding used to set up the firm. Responding to one such question, Durov answered that the company plans to continue to spend funds in a way similar to budgets from previous years.

He added:

“My expectation is that we will continue to spend funds in a manner similar to which took place last year or this year — or, yeah, last year and the beginning of this year. So we don’t anticipate big changes up until the launch of TON when we expect that certain expenses might go down due to the fact that we will no longer be spending resources on developing and testing TON.”

Further, Tenreiro asked the defendants on what percentage of Grams out of the 5 billion tokens in circulation will be held by Telegram‘s employees upon the launch. In response, Durov reconfirmed that Telegram will not hold any Grams after the launch of the Telegram Open Network (TON).

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Durov also added that the firm plans to distribute 4% of Grams among its developers by noting that they are still “evaluating” exact figures.

He stated:

“I can reconfirm that Telegram will not hold any Grams post launch. We mentioned in the offering materials that we plan to distribute 4 percent of Grams, which should be around 200 million Grams, I believe, among the development team, and we are still evaluating, under the circumstances, whether we would proceed with that initial plan of distributing all or some of those 200 million Grams among the developers that worked on TON.”

Likewise, the SEC also did not miss the chance to ask Telegram about incentives for its developers, regarding which Durov mentioned Telegram’s smart contracts contest announced in September 2019. The executive added that the prize budget is “is still there” and the firm continues accepting and rewarding individuals within the program.

According to a deposition transcript acquired by The Bell, the Russian publication, Durov financed Telegram from his personal expenditure coming from the sale of VKontakte (VK) in 2014.

Durov, who founded the Facebook-like Russian social media website back in 2006, claimed that he used his funds from VK from 2013 up until 2018.

In addition, Durov said that Telegram’s staff count has not changed much since 2017, accounting for 25 employees who “write programming code.”

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Durov added that the firm has also involved “hundreds of independent contractors” though.

As it has been reported recently, Telegram will have to provide its redacted bank records to the court until February 26, while the legal battle between the SEC and Telegram has been hitting up, thus, some software makers have continued to work on block explorers designed for the TON blockchain.

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