Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 1 of 7
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SECURITIES AND EXCHANGE COMMISSION, :
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`Plaintiff, :
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`- against - :
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`TELEGRAM GROUP INC. and TON ISSUER INC.,
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`Defendants.
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`19 Civ. 9439 (PKC)
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`ECF Case
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`FINAL JUDGMENT AS TO DEFENDANTS
`TELEGRAM GROUP INC. AND TON ISSUER INC.
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`The Securities and Exchange Commission (“Commission”) having filed a Complaint and
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`Defendants Telegram Group Inc. (“Telegram”) and TON Issuer Inc. (together with Telegram,
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`“Defendants”) having entered a general appearance; consented to the Court’s jurisdiction over
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`Defendants and the subject matter of this action; consented to entry of this Final Judgment
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`without admitting or denying the allegations of the Complaint (except as to jurisdiction); waived
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`findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment:
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`I.
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`IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants, and
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`Defendants’ officers, agents, servants, employees, attorneys, and all persons in active concert or
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`participation with them who receive actual notice of this Final Judgment by personal service or
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`otherwise, are permanently restrained and enjoined from violating Section 5 of the Securities Act
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`of 1933 (“Securities Act”) [15 U.S.C. § 77e] by, directly or indirectly, in the absence of any
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`applicable exemption:
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`(a)
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`Unless a registration statement is in effect as to a security, making use of any
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 2 of 7
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`means or instruments of transportation or communication in interstate commerce
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`or of the mails to sell such security through the use or medium of any prospectus
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`or otherwise;
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`(b)
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`Unless a registration statement is in effect as to a security, carrying or causing to
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`be carried through the mails or in interstate commerce, by any means or
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`instruments of transportation, any such security for the purpose of sale or for
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`delivery after sale; or
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`(c) Making use of any means or instruments of transportation or communication in
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`interstate commerce or of the mails to offer to sell or offer to buy through the use
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`or medium of any prospectus or otherwise any security, unless a registration
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`statement has been filed with the Commission as to such security, or while the
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`registration statement is the subject of a refusal order or stop order or (prior to the
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`effective date of the registration statement) any public proceeding or examination
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`under Section 8 of the Securities Act [15 U.S.C. § 77h].
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the preliminary
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`injunction that is the subject of the Court’s Order dated March 24, 2020, hereby expires by its
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`terms and this Final Judgment.
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`II.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant to Section
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`21(d)(5) of the Securities Exchange Act of 1934 [15 U.S.C. § 78u(d)(5)], Defendants, and
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`Defendants’ officers, agents, servants, employees, attorneys, and all persons in active concert or
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`participation with them who receive actual notice of this Final Judgment by personal service or
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`otherwise, and for a period of three years beginning on the date of entry of this Final Judgment,
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 3 of 7
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`shall give to the Commission forty-five (45) days’ notice before Defendants participate, directly
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`or indirectly, in an issuance of “cryptocurrencies,” “digital coins,” “digital tokens,” or any
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`similar digital asset issued or transferred using distributed ledger technology. Nothing in this
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`paragraph requires, or should be construed to require, Defendants to seek the Commission’s
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`approval or consent prior to issuing any asset encompassed by this paragraph, nor should this
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`paragraph be construed to require Defendants to provide the Commission with any information
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`beyond the notice contemplated herein. Defendants shall transmit the notice required by this
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`paragraph to the Commission’s counsel of record in this action.
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`III.
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`IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
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`Defendants are jointly and severally liable for disgorgement of $1,224,000,000. The total
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`amount of Defendants’ disgorgement obligation shall be credited and offset by: (i)
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`$1,193,400,000, an amount equal: (A) amounts Defendants have paid as “Termination
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`Amounts,” as that term is defined in Section 1.1 of the “Purchase Agreements for Grams”
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`entered into between Defendants and certain parties, to the parties entitled to receive such
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`Termination Amounts pursuant to the Purchase Agreements for Grams; and (B) amounts that
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`parties to the Purchase Agreements for Grams agree to loan to Telegram in lieu of accepting
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`immediate payment of the Termination Amounts owed to the loaning party under the Purchase
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`Agreements for Grams; and (ii) by additional “Termination Amounts,” up to $30,600,000, that
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`Telegram pays to parties entitled to receive such Termination Amounts pursuant to Purchase
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`Agreements for Grams, provided that such payments are made within three years of the date of
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`entry of this Final Judgment (which time may be extended for a one-time period of one year).
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`Defendants shall transmit to the Commission’s counsel of record in this action evidence of
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 4 of 7
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`payment(s) of the Termination Amounts to the recipients of those payments and of the amounts
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`that parties to the Purchase Agreements for Grams agree to loan to Telegram in lieu of accepting
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`immediate payment of such Termination Amounts under the Purchase Agreements for Grams.
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`Defendant Telegram Group Inc. is liable for a civil penalty in the amount of $18,500,000
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`pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)]. Defendant Telegram Group
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`Inc.’s obligation to pay a civil penalty shall be satisfied by paying $18,500,000 to the Securities
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`and Exchange Commission within 30 days after entry of this Final Judgment.
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`Defendants may transmit payment electronically to the Commission, which will provide
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`detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly
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`from a bank account via Pay.gov through the SEC website at
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`http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified check, bank
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`cashier’s check, or United States postal money order payable to the Securities and Exchange
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`Commission, which shall be delivered or mailed to
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`Enterprise Services Center
`Accounts Receivable Branch
`6500 South MacArthur Boulevard
`Oklahoma City, OK 73169
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` and shall be accompanied by a letter identifying the case title, civil action number, and name of
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`this Court; Telegram Group Inc. and TON Issuer Inc. in this action; and specifying that payment
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`is made pursuant to this Final Judgment.
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`Defendants shall transmit to the Commission’s counsel of record in this action,
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`simultaneously with Defendants’ payment, evidence of payment(s) of civil penalty amounts to
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`the Commission, with case identifying information in each such transmission.
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`By making payments of the Termination Amounts (as that term is defined in Section 1.1
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`of the “Purchase Agreements for Grams”), or of the disgorgement and civil penalty amounts to
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 5 of 7
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`the Commission, Defendants relinquish all legal and equitable right, title, and interest in such
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`funds and no part of the funds shall be returned to Defendants. The Commission shall send the
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`funds paid pursuant to this Final Judgment to the United States Treasury. The Commission may
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`enforce the Court’s judgment for disgorgement and civil penalty by moving for civil contempt
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`(and/or through other collection procedures authorized by law) at any time after 30 days
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`following entry of this Final Judgment.
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`Amounts ordered to be paid as civil penalties pursuant to this Judgment shall be treated
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`as penalties paid to the government for all purposes, including all tax purposes. To preserve the
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`deterrent effect of the civil penalty, Defendants shall not, after offset or reduction of any award
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`of compensatory damages in any Related Private Action based on Defendants’ payment of
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`disgorgement in this action, argue that they are entitled to, nor shall they further benefit by,
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`offset or reduction of such compensatory damages award by the amount of any part of
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`Defendant’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any
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`Related Private Action grants such a Penalty Offset, Defendants shall, within 30 days after entry
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`of a final order granting the Penalty Offset, notify the Commission’s counsel in this action and
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`pay the amount of the Penalty Offset to the United States Treasury. Such a payment shall not be
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`deemed an additional civil penalty and shall not be deemed to change the amount of the civil
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`penalty imposed in this Judgment. For purposes of this paragraph, a “Related Private Action”
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`means a private damages action brought against Defendants by or on behalf of one or more
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`private third parties based on substantially the same facts as alleged in the Complaint in this
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`action.
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 6 of 7
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`IV.
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`IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that if at any
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`time following the entry of the Final Judgment the Commission obtains information indicating
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`that Defendants knowingly provided materially false or misleading information or materials to
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`the Commission or in a related proceeding, the Commission may, at its sole discretion and
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`without prior notice to the Defendants, petition the Court for an order requiring Defendants to
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`pay an additional civil penalty. In connection with any such petition and at any hearing held on
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`such a motion: (a) Defendants will be precluded from arguing that they did not violate the
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`federal securities laws as alleged in the Complaint; (b) Defendants may not challenge the validity
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`of the Judgment, the Consent, or any related Undertakings; (c) the allegations of the Complaint,
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`solely for the purposes of such motion, shall be accepted as and deemed true by the Court; and
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`(d) the Court may determine the issues raised in the motion on the basis of affidavits,
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`declarations, excerpts of sworn deposition or investigative testimony, and documentary evidence
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`without regard to the standards for summary judgment contained in Rule 56(c) of the Federal
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`Rules of Civil Procedure. Under these circumstances, the parties may take discovery, including
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`discovery from appropriate non-parties.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants’
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`V.
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`Consents to this Final Judgment, entered into on June 11, 2020, are incorporated herein with the
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`same force and effect as if fully set forth herein, and that Defendants shall comply with all of the
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`undertakings and agreements set forth therein.
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`Case 1:19-cv-09439-PKC Document 241 Filed 06/25/20 Page 7 of 7
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`VI.
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`IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
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`jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.
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`Dated: ______________, 2020
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`____________________________________
`HON. P. KEVIN CASTEL
`UNITED STATES DISTRICT JUDGE
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