On March 24, 2020, Judge P. Kevin Castel of the Southern District of New York issued a potentially groundbreaking decision in the matter of Securities and Exchange Commission v. Telegram Group Inc. et al. In his decision, Judge Castel tackled an issue that lies at the forefront of the cryptocurrency regulatory space: when are digital assets subject to the securities laws and SEC regulation? In granting its motion for a preliminary injunction, Judge Castel found that the SEC had shown a substantial likelihood of success in proving that Telegram Group Inc. and TON Issuer Inc. (collectively, “Telegram” or the “Company”) had engaged in an unregistered offering of securities—in violation of the Securities Act of 1933 (the “Securities Act”)—by selling “Grams,” a digital token, to certain sophisticated investors.2 The Court’s decision may have a substantial effect on the token industry and the SEC’s enforcement efforts in this space—should the decision be upheld on appeal—because of the Court’s focus on “economic reality” in piercing through contractual representations and warranties in deciding whether a token sale should be regulated under the securities laws.