Messaging giant Telegram is a step closer to end its year-long battle with the US regulators over the TON blockchain. Today, the U.S. Securities and Exchange Commission (SEC) revealed a proposed settlement with Telegram that involves civil penalties, as well as limitations for any future plans to revive its crypto ambitions.
The order, which Telegram consented to without admitting or denying the findings, imposes a $18.5 million penalty, and requires the social network to disgorge nearly $1.2 billion to refund investors after its scheduled release of the Gram token failed.
Additionally, if Telegram plans to issue any “‘cryptocurrencies,’ ‘digital coins,’ ‘digital tokens,’ or any similar digital asset over the next three years, the messaging app is obliged under this settlement to notify the SEC 45 days prior to making any further step as to the future course of these plans.
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Telegram has already offered to pay back investors 72% of their investments immediately after the latest deadline for the launch of the Telegram Open Network (TON) expired on April 30. In the second repayment suggestion, Telegram proposed to pay 110% of the original investment, either in cash, stock or a different cryptocurrency, if investors were ok to leave their money with the company until April 30, 2021.
Telegram gave up on the hard-fought project
The news comes nearly six weeks after Telegram abandoned its TON blockchain project. The decision comes after mounting legal ramifications coupled with the more aggressive stance taken by the US regulators, which ultimately made Telegram executives reconsider their crypto ambitions altogether.
Pavel Durov, the founder and chief executive of Telegram, blasted the court’s ruling that found the resale of Grams into the secondary public market would be an integral part of the scheme that involves US purchasers and thus likely securities laws would apply. The rejection centered around the same claims that supported the preliminary injunction, including whether Telegram could flood United States markets with billions of Grams and if the token itself is a “security”.
Telegram had been fighting the suit since October 2019, claiming its grams are utility tokens, outside the US authorities’ purview. After several months of back and forth, during which the cryptocurrency community speculated regarding the potential outcome of the conflict, the court order got in line with the SEC’s key arguments.