Telegram will pay $18.5m in penalties to end token sale dispute with the SEC
June 25, 2020, 2:39PM EDT
1 min read
The legal battle between Telegram and the Securities and Exchange Commission (SEC) appears all but finished in light of a proposed final judgment by which Telegram will pay the regulator $18,500,000 in penalties related to its now-abandoned TON project.
A proposed judgment dated June 11 and filed Thursday indicated that the messaging platform will have 30 days to pay the penalty. It also ruled that Telegram is liable for a disgorgement of $1.22 billion. However, the disgorgement is offset by so-called "termination amounts" in investors' purchase agreements, meaning the platform will pay investors $1.19 billion.
Telegram will have three years to pay back investors, with the possibility of an additional one-year extension.
The settlement closes a dispute that has gone on since last October, when the SEC sued the platform for attempting to distribute tokens from a $1.7 billion sale tied to its TON blockchain project. Telegram later shut down the TON project in May, citing to the SEC's lawsuit and its impact.
Telegram founder Pavel Durov addressed the settlement in a post on his personal channel on Thursday, remarking: "Regrettably, we were unable to launch the TON platform by our deadline date due to the preliminary injunction ordered by the Court, and thus had to return the remaining funds to purchasers under our contractual agreements. Since we saw limited value in pursuing the court case further, we welcomed the opportunity to resolve it without admitting or denying our liability."
"Today’s proposed settlement reconfirms our commitment to repay the remaining funds to purchasers under the Purchase Agreements. We’ve already repaid more than 1.2bn to the purchasers either directly or in the form of loans," Durov continued.