Telegram Dissolves TON: The grand crypto-currency hopes of Pavel Durov with his telegram messaging service ends with an $18.5 million civil settlement with the U.S. Securities and Exchange Commission. It has also committed to return more than $1.2 billion invested in its TON digital token by investors.
The settlement concludes a legal dispute between the firm and the regulator that lasted months. The SEC lodged a lawsuit against Telegram in October 2019 claiming the company had raised money through the sale of 2.9 billion Grams to fund its business. The SEC tried to order Telegram to deliver the Grams it sold, allegedly securities by the regulator. The United States District Court for New York ‘s Southern District agreed with the SEC in March and issued a preliminary injunction.
In May Telegram announced that the TON initiative was being shut down.
Telegram Dissolves TON – Announcing the shutdown of TON, Durov wrote,
“I want to conclude this post by wishing luck to all those striving for decentralization, balance and equality in the world. You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed.”
The SEC disagreed with Durov ‘s assessment of its actions in its own announcement of the settlement.
Chief of the SEC Enforcement Division’s Cyber Unit, Kristina Littman said in a statement, “New and innovative businesses are welcome to participate in our capital markets but they cannot do so in violation of the registration requirements of the federal securities laws.” She further quoted, “This settlement requires Telegram to return funds to investors, imposes a significant penalty, and requires Telegram to give notice of future digital offerings.”
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The regulator ‘s argument is, Telegram has not followed the rules. According to the SEC, if it had collaborated with the regulator instead of releasing the token offering without any oversight, the result might have been different.
Lara Shalov Mehraban, associate regional director of the New York Regional Office said, “Our emergency action protected retail investors from Telegram’s attempt to flood the markets with securities sold in an unregistered offering without providing full disclosures concerning their project”. She further said, “The remedies we obtained provide significant relief to investors and protect retail investors from future illegal offerings by Telegram.”