Telegram has agreed to pay the sum of $18.5 million as a penalty for its failed SEC offering. The company will also notify the Commission if it plans to issue any digital currency over the next three years.
Telegram’s TON Issues Resolved
Telegram, the social media giant, has agreed with a proposed settlement to the U.S. Securities and Exchange Commission (SEC), according to a court filing on Thursday. The filing revealed that Telegram is set to pay $18.5 million as a penalty and to further notify the SEC if it plans on issuing a digital currency in the next three years.
The settlement was reached on June 11, which brings an end to a six-month court battle between the agency and Telegram. The messaging platform will be liable for a $1.22 billion disgorgement, which will be offset by $1.19 billion paid as “termination amounts” according to the investors’ purchase agreements and the amount some of them loaned the company earlier this year. The messaging platform has been given 30 days to pay the penalty, while it will take up to four years to settle its investors.
In addition to this, the messaging platform will notify the SEC if it wishes to issue cryptos, digital coins, digital tokens, or any sort of digital asset that is distributed via ledger technology, over the next three years. The notification, while not representing a request for approval, will come 45 days before the planned issuance, the court filing added.
The settlement considered the fact that Telegram is committed to terminating its TON development and to paying back its investors.
The messaging platform has offered its non-U.S investors the opportunity to loan them their money for a year, with an agreement to pay back 110% of the amount by April 2021. This is an alternative to receiving only 72% of their investment last month. However, not many investors are happy with the outcome, with some of them threatening to sue Telegram.
Failed TON Offering
The securities regulator sued the messaging platform in October last year after the company raised $1.7B in token sales to fund the development of its TON blockchain. SEC eventually won after a federal court sided with them, with Telegram asked to terminate its token issuance this year. Telegram appealed the rulings but later decided to stop.
On May 27, Telegram announced that it would be stopping work on TON. However, it published some code for the project. The company added that some nearly completed components of TON Payments, TON Storage, and CPS Fift were added to the main branch after undergoing testing. The TON development team was asked to terminate its active involvement with the project.
The U.S. SEC declined to comment on this latest settlement proposal. However, the agency issued a letter to the court saying that the settlement is fair and reasonable, while also protecting the public interest.
The founder of Telegram, Pavel Durov, pointed out that Telegram agreeing to the settlement reconfirms their commitment to repaying the remaining funds to investors. Durov added that since the company saw little value in pursuing the court case further, they accepted the opportunity to resolve it with denying or admitting any liability. He ended his speech with a call on the United States to become friendlier to blockchain projects in the future.