Telegram's prolonged legal battle with the U.S. Securities and Exchange Commission (SEC) over its TON blockchain project has finally come to a close. The messaging giant has agreed to pay a penalty and return investor funds.
The protracted legal confrontation between the popular messaging platform, Telegram, and the U.S. Securities and Exchange Commission (SEC) has finally reached its conclusion. The SEC investigation into Telegram’s blockchain project, known as the Telegram Open Network (TON), has resulted in a settlement agreement.
Telegram Pays the Price
As part of the settlement, Telegram has agreed to pay a civil penalty of $18.5 million to the SEC and return more than $1.2 billion to investors. The funds will be returned under a process known as “disgorgement,” which is intended to deprive wrongdoers of their ill-gotten gains and deter others from committing similar offenses.
The settlement brings an end to a legal battle that began in October 2019 when the SEC filed an emergency action and obtained a temporary restraining order against Telegram and its TON issuer, citing that the company’s ICO was in violation of U.S. securities laws.
Related: TON Recovery Under Threat: The Consequences of the SEC Lawsuit
The TON Project
The TON project was a highly ambitious blockchain venture by Telegram. The platform intended to create a blockchain ecosystem that would be integrated with the company’s messaging app, allowing users to access a range of decentralized applications (dApps).
To fund this project, Telegram conducted one of the largest Initial Coin Offerings (ICOs) in history, raising $1.7 billion from investors in early 2018. However, the SEC alleged that the token sale constituted an unregistered offering of securities.
Related: Top 6 Innovative Projects Thriving on TON Blockchain
The Legal Battle
Despite Telegram’s attempts to fulfill regulatory requirements, the SEC maintained its stance that the TON tokens, referred to as GRAMs, were securities under U.S. law. The ensuing legal dispute has been one of the most high-profile cases in the crypto industry, setting a significant precedent for future blockchain projects.
In March 2020, a court in New York upheld the SEC’s position, ruling that Telegram’s token sale was indeed an unregistered securities offering. Following the ruling, Telegram announced its decision to abandon the TON project.
Related: Telegram TON Crystals and the Rise of Airdrops
The Aftermath
In the wake of the settlement, Telegram is now required to notify the SEC if it plans to issue any form of digital currency in the next three years. Furthermore, the company has been ordered to provide a comprehensive report on the disbursement of the investor funds.
Despite the setback, Telegram remains committed to its mission of providing a secure and user-friendly messaging platform. The resolution of the case could provide some clarity and guidance for other companies in the crypto space facing regulatory scrutiny in the future.
Investors who participated in the TON token sale will be anxiously waiting to see how the situation unfolds with the return of their funds. It remains to be seen whether the TON project will be revived in the future under different circumstances or remain a landmark case in the history of blockchain projects.
John is a renowned journalist and blockchain enthusiast with over 12 years of experience covering global financial trends and cryptocurrency markets. His sharp insights and ability to break down complex topics make him a cornerstone of finandcrypto.com. Known for his analytical skills, John is passionate about delivering content that empowers the crypto community.
