Telegram has told its investors that it has delayed the launch of its TON blockchain until April 2020 as it tries to cut a deal with the Securities and Exchange Commission (SEC). In an email to investors stating that they intend to “rigorously defend the lawsuit” brought by the SEC, Telegram announced that there may be a chance for investors to recoup most of their investment if the majority vote against the extension.
Investors Can Get (Almost) All Their Money Back
Telegram’s ICO, which was first mooted in January 2018 and went on to raise $1.7 billion, was dealt a blow close to its October 31 launch by the SEC, who filed an emergency order to have it stopped on the basis that the ICO amounted to the sale of unlicensed securities. Telegram recently contacted first and second round about the delay, with those who contributed in the second round offered the chance to vote on whether they wished to remain investors or receive “approximately 77 percent” of their contribution back, with a majority verdict accepted. Telegram state in the email that TON will now launch on April 30, 2020, a delay that will cost them another $80 million, with the short-term focus now being to “resolve the SEC’s lawsuit and work with other governmental authorities” in getting the ICO back above board.
Fine and Delay Factored In?
The trap Telegram fell into is the same trap that many ICOs have fallen into since 2017 in the rush to raise money for their projects without the proper legal advice. Most notably, EOS, which raised $4.1 billion during its year-long ICO, was fined $24 million at the beginning of October for breaching the same rules. Given Telegram’s resources, and the legal issues they have run into, including with the Russian government no less, it is highly unlikely that they did not foresee the sale of tokens to US citizens as a breach of securities laws and did not plan for this. As EOS found, it is much easier to beg for forgiveness than to ask permission through clearing securities regulations up front, the only difference being a larger cost (fine vs compliance). If history is our guide, Telegram will now send their lawyers to the SEC to settle the case, pay a fine, and carry on as normal without having to admit to anything, while the SEC gets to claim a win and gets another few million in the bank. C’est la vie.