After almost a year-long battle with the US regulators, cloud-based instant messaging platform Telegram has finally agreed to settle the charges levied against it.
In October 2019, Coinfomania reported that the United States Securities and Exchange Commission (SEC) filed an emergency action and a temporary restraining order against Telegram for raising funds from investors since January 2018.
The regulator charged Telegram and its subsidiary, TON Issuer Inc, with sales of unregistered securities in the U.S. and overseas to fund the development of the TON cryptocurrency project, through their messaging platform.
Telegram agrees to pay over $1.24 billion
A new report released by the SEC revealed the regulator has obtained court approval of settlement with Telegram, and the messaging platform and its subsidiary agreed to resolve the SEC charges. The defendants will now return more than $1.2 billion to investors and pay an $18.5 million civil penalty.
“New and innovative businesses are welcome to participate in our capital markets, but they cannot do so in violation of the registration requirements of the federal securities laws. This settlement requires Telegram to return funds to investors, imposes a significant penalty, and requires Telegram to give notice of future digital offerings,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit.
Telegram’s agreement on the final judgment which enjoined them from violating the registration provisions as provided by law, without denying or admitting the allegations the SEC had made against them, suggests that they are probably guilty of the charges. The company announced in May that it would shut down the TON cryptocurrency project.
Aside from the $1,224,000,000 they are to return to investors, and the $18.5 million civil penalties they are mandated to pay, the company is further required to give notice to the SEC before issuing any digital assets for the next three years
The Associate Regional Director of the New York Regional Office, Lara Shalov Mehraban, commented,
“Our emergency action protected retail investors from Telegram’s attempt to flood the markets with securities sold in an unregistered offering without providing full disclosures concerning their project. The remedies we obtained provide significant relief to investors and protect retail investors from future illegal offerings by Telegram.”