A settlement with the SEC marks the end of encrypted messaging app Telegram’s “Gram” digital currency project, which the company said last year would operate on a decentralized framework reminiscent of bitcoin. As part of the settlement, Telegram and subsidiary TON Issuer this week agreed to pay a $18.5M civil penalty and return around $1.2B to investors.

Why should we care?
The end of Telegram’s cryptocurrency project was the result of a months-long court battle with the SEC, which argued Telegram’s digital currency was a security, and that its sale violated registration requirements of federal securities laws. Had Telegram worked with regulators prior to launching the token offering, the outcome might have been different. The SEC’s moves demonstrate the extent to which regulators still view digital currencies as risky propositions, not long after Facebook’s Libra digital currency plans were scuttled by regulatory scrutiny. Cryptocurrency proponents, however, see the development as a threat to innovation that will drive these efforts overseas.