Messaging startup Telegram Group Inc. is close to settling its case with the U.S. Securities and Exchange Commission over its sale of Gram cryptocurrency for its TON blockchain network in 2018.
Under the terms of a proposed settlement, Telegram has agreed to pay a penalty of $18.5 million to the SEC as well as agreeing to return some of the monies raised in the token offering. The settlement also specifies that Telegram must give the SEC at least 45 days notice on any plans it has to launch any cryptocurrencies, digital coins, tokens or similar digital assets issued or transferred using digital ledger technology.
The settlement will put a close to a case that started with the SEC obtaining a temporary restraining order on Telegram’s token sale in October. The restraining order claimed that the token sale which raised $1.7 billion in pre-sales – one of the biggest raises in blockchain history, was offered as an unregistered security.
At all stages, the money raised was declared in filings with the SEC with Telegram believing that the money raised was done so legally whereas the SEC argued the offering should have been registered under the Securities Act of 1933.
Telegram initially argued against the restraining order, losing a court case in March where a U.S. District Judge ruled that the SEC had demonstrated a plausible case that Telegram sold unregistered securities in breach of U.S. securities law.
With things not going their way, Telegram announced that it was abandoning its TON blockchain project