Telegram has pleaded guilty in a court battle with the Securities and Exchange Commission and will no longer fight the SEC’s ban on its blockchain token program. In a filing Friday, the messaging app provider said it would withdraw its appeal against the SEC’s decision to ban the issuance of Gram tokens to investors inside and outside the United States. Therefore, the case has been closed for the time being, but not necessarily forever.
Telegram raised $1.7 billion in a private token sale in early 2018 to develop a blockchain called Telegram Open Network, or TON. The project was halted by the Securities and Exchange Commission in October for violating U.S. securities laws, just weeks before the original listing date.
After six months of written arguments and a hearing in the Southern District Court of New York, Judge Kevin Castel upheld a preliminary injunction on March 24 that would prevent Telegram from issuing tokens to investors. Telegram immediately appealed, but that effort ended with Friday’s withdrawal.
On May 12th Pavel Durov, Telegram’s chief executive, announced in a blog post that Telegram would no longer develop TON. The blog post marks Durov’s first public statement about the project, which was developed in large secret. Now, Gram’s investors have two options: under the previously agreed contract amendment, they can choose to recoup 72% of their investment in TON or lend the money to Telegram for a year, promising to get 110% in April 2021. U.S. investors have only the first option.
Some investors told CoinDesk that they had received refunds, but many were unhappy with the results and said they were considering suing Telegram. So far, Telegram has not announced the news. However, the TON project may not have completely died. Earlier this month, a group of professional certifiers launched a forked version of the blockchain, named Free TON, and received technical support from TON Labs, a start-up that had previously helped Telegram with the project.