- Telegram has been ordered to repay investors $1.2 billion of the $1.7 billion invested in its TON blockchain.
- The messaging company also has to pay an $18.5 million fine
- TON was the world’s largest ICO
Telegram has been ordered to repay investors $1.2 billion after shuttering its TON blockchain ICO in May. The order comes from the US District Court Southern District of New York where the Securities and Exchange Commission (SEC) had filed a complaint regarding the $1.7 billion ICO, accusing the messaging company of selling unlicensed securities.
Telegram Must Refund Unspent Money
The judgement orders that Telegram repays the unspent funds remaining from the ICO, which stands at over $1.2 billion, while also paying an $18.5 million fine into the bargain. The company has also been told that they must give the SEC 45 days’ notice if they intend to become involved in the creation/distribution of a cryptocurrency within the next three years.
The judgement brings to an end two and a half years of work by Telegram to create the TON blockchain, which led a $1.7 billion raise that signified the top of the ICO boom. The technicalities of the platform were quickly overlooked in favour of the crazy sum that was raised, a situation that only worsened when it was revealed that early investors were selling their future allocation of the Grams cryptocurrency for multiples of what they paid, no doubt alerting the authorities to the possibility of the tokens being treated as securities..
SEC Shuts TON Down
The SEC got involved in the Telegram project in October 2019 when it managed to halt the distribution of the first wave of tokens to seed investors through “emergency action”, with its actions in the US managing to impact Telegram’s token distribution globally. Telegram formally abandoned its blockchain last month, and, providing that they pay the fine and disgorgement on time, the ruling brings to an ignominious end the world’s largest ICO.
The ruling also raises questions about how Telegram used the money it raised. In two years of developing the blockchain they only used 30% of the funds collected, so where on Earth was the other 70% going to go? Spending $500 million on developing a blockchain is quite a feat in itself, and it seems that greed may have got the better of the company in 2018. Given how some big money ICOs have gone in the past, investors can think themselves lucky that there is this much money left to come back to them.