- The legal battle between the SEC and Telegram has ended
- The SEC and Telegram reached an agreement on June 11
- Telegram has agreed to pay the SEC $18.5 million in civil penalties
Cryptocurrency News Today – in what appears to be the conclusion of the long legal battle between messaging giant Telegram and the U.S. SEC (Securities and Exchange Commission), the former has agreed to pay a civil penalty. The civil penalty to be paid by Telegram to the SEC is $18.5 million. Telegram will also pay a $1.2 billion disgorgement fee to the SEC according to the settlement.
Recall that the SEC filed a final judgment with the District Court of Southern New York on June 25. According to the court documents, the SEC posited that it had reached a settlement agreement with Telegram on June 11. In the settlement, Telegram agreed to a pay disgorgement fee of $1.2 billion. The report also adds that Telegram will pay the disgorgement in installments within four years.
Telegram Will Pay the SEC a Civil Penalty of $18,500,000
As stated above the messaging company agreed to pay the United States regulator a civil penalty of $18,500,000. The federal regulator has given Telegram 30 days to pay the $18.5 million penalty fee if the Southern New York court approves the judgment. Per the SEC court filing:
“The amounts ordered herein will be paid as civil penalties according to this Judgment must be treated as penalties to be paid to the government for all purposes, including taxes.”
Additionally, apart from the payment of civil penalties and the disgorgement fee, the court filing also stated that Telegram must notify the SEC before conducting future crypto token sales during the next three years. The company must inform the SEC of its plans 45 days beforehand before it can issue any “cryptocurrencies.”
Telegram’s Long Battle With the United States SEC
In 2018, Telegram reportedly raised $1.7 billion from investors for its ICO (initial coin offering). The ICO funds were for the development of Telegram’s Blockchain project, known as Telegram Open Network (TON). The war between the SEC and Telegram began when the federal regulator stepped in to stop the sale of the latter’s gram tokens (TON). The SEC claimed that Telegram’s tokens were classified as securities offering meaning the 2018 ICO was unlawful.
Later in January this year, the SEC got a court order to gain access to Telegram’s financial records. Recall that initially, the messaging giant refused to submit its financial records to the commission. However, the New York Southern District court eventually dismissed the SEC’s request to view Telegram’s financial records. But in March, a court injunction stopped Telegram from issuing gram tokens after they were classified as securities based on the Howey Test.