One of the longest legal battles in the history of the crypto industry is definitely the one between the Global messaging giant Telegram and the United States Securities and Exchange Commission. The SEC has been on Telegram’s tail for years regarding its $1.7 billion Gram tokens sale.
After a lengthy battle with the SEC U.S. District Judge P. Kevin Castel of the Southern District of New York agreed that the SEC demonstrated a plausible case that Telegram sold unregistered securities in breach of U.S. securities law. The Judge issued a preliminary injunction that stopped Telegram from launching TON.
As per recent reports, the long on-going battle seems to be coming to an end as the messaging giant is set to pay a civil penalty of $18.5 million to SEC and a $1.2 billion disgorgement fee according to a proposed agreement.
The SEC filed a proposed final judgment with the U.S. District Court of Southern District of New York on June 25. The filing reveals that both Telegram and the SEC have reached a settlement agreement on June 11.
Telegram is expected to pay a disgorgement of $1.2 billion, out of which $1.19 billion will serve as “termination amounts” to investors according to the contract for the purchase gram tokens. Telegram now has four years to pay off the termination amount.
The company has also agreed to pay a civil penalty of $18,500,00 to the SEC in 30 days if the court approves the judgment. The filing reads:
“Amounts ordered to be paid as civil penalties pursuant to this Judgment shall be treated as penalties paid to the government for all purposes, including all tax purposes.”
Besides all the penalties imposed, the messaging giant would be required to notify the U.S securities regulator about any cryptocurrency token sale it might plan on conducting within the next three years. The filing notes that Telegram will inform the SEC 45 days before issuing any “digital tokens” or “cryptocurrencies.”
Jake Chervinsky, General Counsel for Compound, the decentralized lending platform, commented:
What happens to TON?
The final agreement comes weeks after reports surface that Ton investors were planning on suing the company over the failed launch of the blockchain project. Vladimir Smerkis, head of crypto startup Tokenbox and one of the investors, said:
“We are considering filing a lawsuit, as the money [Telegram CEO] Pavel Durov spent on the project got investors nothing, while at least, it would be fair to talk about getting Telegram’s equity, for example.”
Meanwhile, the TON community as a whole, decided to go ahead with the development of its own blockchain network. Dubbed ‘Free TON’, the blockchain is set to use code maintained by TON labs and has the support of 13 validators
TON Labs CTO Mitya Goroshevsky said:
“The network must not be censored, it must go to the world.”