Pavel Durov’s grand cryptocurrency dreams for his Telegram messaging service are ending with an $18.5 million civil settlement with the U.S.
Securities and Exchange Commission and a pledge to return the more than $1.2 billion that investors had put into its TON digital token.
The settlement ends a few months long legal battle between the company and the ruler. In October 2019 that the SEC registered a complaint against Telegram alleging that the firm had increased funds through the sale of 2.9 billion Grams to fund its organization.
The SEC sought to enjoin Telegram from providing the Grams it marketed, which the ruler declared were securities. In March, the U.S. District Court for the Southern District of New York agreed with the SEC and issued a preliminary injunction.
Announcing that TON was being shut down, Durov
In its announcement of the settlement, the SEC differed with Durov’s Evaluation of Its Own Activities
“New and innovative companies are welcome to take part in our capital markets however they can’t do so in breach of the enrollment requirements of the federal securities laws,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, in a statement.
“This settlement takes Telegram to return capital to investors, imposes a substantial penalty, and needs Telegram to provide notice of future electronic offerings.”Also read: 7 Accounting Tips All Small Businesses should know
The debate from the ruler is that Telegram did not stick to the rules. Had it worked together with the ruler rather than starting the token offering with no supervision, the result could have been different, according to the SEC.
“Our crisis actions shielded retail investors from Telegram’s effort to flood the markets with securities offered in an unregistered offering without supplying complete disclosures concerning their job,” said Lara Shalov Mehraban, associate regional director of the New York Regional Office.
“The treatments we got provide substantial aid to protect and investors retail investors from potential prohibited offerings by Telegram.”