Telegram has conceded defeat in its court battle with the Securities and Exchange Commission (SEC) over the TON blockchain project.
TON Blockchain Case with SEC Ends
Social media giant, Telegram has accepted defeat in its court battle against the U.S. SEC regarding its TON blockchain project. The company revealed that it would no longer be fighting the restrictions on its blockchain token project.
Telegram, in a court filing on Friday, mentioned that it was withdrawing its appeal over a former court order that supported the SEC in halting the issuance of gram tokens to investors in the United States and other parts of the world. The new document was filed with the U.S. Court of Appeals for the Second Circuit. The document stated that the parties in the case had filed a stipulation withdrawing this appeal, according to Local Rule 42.1.
This implies that the two parties involved in the case have filed an agreement to dismiss the case without prejudice. Thus, the case is over at the moment, but it might surface in the future.
Telegram conducted one of the most successful initial coin offerings (ICO) in the history of the cryptocurrency space after raising $1.7 billion in a private token sale event two years ago. The ICO funds were to be used to develop a blockchain called the Telegram Open Network, or TON.
However, the project was stopped in October last year by the SEC for allegedly violating the U.S. securities law. The regulator halted the project just weeks away from the official launch of the blockchain and its cryptocurrency.
Following a six months legal battle between Telegram and SEC, Judge Kevin Castel of the Southern District Court of New York backed the move by the SEC and halted Telegram from issuing the tokens to both local and foreign investors. Telegram moved to appeal the court’s decision, but the recent filing on Friday shows that the effort had died.
Earlier this month, Telegram CEO, Pavel Durov, announced that the instant messaging company would stop developing the TON blockchain. That was the first statement made by the CEO regarding the project as Telegram was initially developing the project in secret.
Telegram gave gram investors two options: either receive only 72% of their investment in TON, which is in accordance with earlier agreements, or loan the money to the company for a year and receive 110% by April 2021. However, interestingly, investors in the U.S. were only given the first option.
Some investors have revealed that they have received their refunds, while others have chosen to loan the money to the company for a year. Despite that, several investors are not happy with the outcome of the project and revealed that they are considering suing Telegram. However, no filed lawsuit has been made public at the moment.
The lack of clear regulations for companies operating in the crypto space continues to present problems as projects do not always know if they are violating securities regulations or other laws. Cryptocurrency enthusiasts are clamoring for clearer regulations for blockchain and crypto entities all over the world.
While the TON blockchain project seems to be dead at the moment, Telegram might work on another blockchain and cryptocurrency in the future. The lessons learned from its battle with SEC could prove useful in their next venture.