Pavel Durov’s big cryptocurrency dreams for his telegram messaging service end with a $ 18.5 million civil agreement with the United States Securities and Exchange Commission and a pledge to return the more than $ 1.2 billion that investors had put in their digital TON token.
The settlement ends with a month-long legal dispute between the company and the supervisory authority. In October 2019, the SEC filed a complaint against Telegram, alleging that the company raised $ 2.9 billion in capital to fund its business. The SEC attempted to prevent Telegram from delivering the grams it sold that the regulator claimed were securities. In March, the U.S. District Court for the Southern District of New York approved the SEC and issued an injunction.
In May, Telegram announced that the TON initiative would be discontinued.
Durov announced that TON would be shut down and wrote:
I would like to conclude this post by wishing all those happiness who strive for decentralization, balance and equality in the world. You fight the right fight. This battle could be the most important battle of our generation. We hope you succeed where we failed.
In its own announcement of the settlement, the SEC differed from Durov̵
“New and innovative companies are welcome to participate in our capital markets, but cannot do so in violation of the registration requirements of US securities laws,” said Kristina Littman, head of the SEC Enforcement Division’s Cyber Unit, in a statement. “This agreement requires Telegram to return funds to investors, impose a substantial penalty, and provide Telegram with information about future digital offerings.”
The regulator’s argument is that the telegram did not follow the rules. If it had worked with the regulator instead of starting the token offering without supervision, the SEC might have turned out differently.
“Our immediate measures protected private investors from Telegram’s attempt to flood the markets with securities sold in an unregistered offer without giving full details of their project,” said Lara Shalov Mehraban, deputy regional director for the New York regional office. “The remedies that we have received provide significant relief to investors and protect private investors from future illegal offers from Telegram.”