After a long hard fight to launch and distribute the GRAM tokens, Telegram and the U.S. Securities and Exchanges Commission (SEC) agreed to settle.
The messaging app will pay the SEC an $18.5 million fine and distribute $1.22 billion back to its investors within the next four years.
According to a court filing on June 24, 2020, the U.S Southern District Court of New York Judge Kevin Castel, ordered Telegram to pay a civil penalty of $18.5 million to the SEC within the next 30 days for violating the securities laws in issuing its GRAM tokens during its public offering.
The court also ordered the disgorgement of the $1.7 billion ICO raised in 2018, asking Telegram to return $1.22 billion (72% of the ICO amount) as agreed in the ICO contract – if the project failed to launch. Telegram already stated that U.S. investors will receive 72% of their investment back with non-U.S. investors having the option to defer their payment for one year and receive 110% of their funds back.
A three-year watch
Telegram will also have a three-year “baby-sitting” period whereby they will need to give the SEC a 45-day notice before the launch or issuance of a similar token to GRAM –
“cryptocurrencies, digital coins, digital tokens, or (and) similar digital asset issued or transferred using distributed ledger technology.”
However, the company is only obliged to give notice to the SEC and does not constitute SEC giving approval or consent on the asset. The statement further reads,
“Nor should this [notice] be construed to require Defendants to provide the Commission with any information beyond the notice contemplated herein.”
A fair ruling?
Lawyer and governing council at Compound Finance, Jake Chervinsky, weighed in on ruling stating it may be the best outcome for Telegram. He tweeted,
“Telegram's SEC settlement seems fair given the facts & circumstances surrounding the TON project & Grams offering (which were very bad for Telegram).”
The six-month-long court battle finally comes to a close but “sadly ends [this saga] on a confused District Court opinion”, Jake said on the court’s decision to use the Howey Test to prove Telegram’s token is a security. No more GRAMs, but TON blockchain lives on as an open-source network.