Nasdaq Reprimands TON Treasury for $558 Million Stock Sale, Crypto Buy

Nasdaq has issued a warning to TON Strategy, one of a slew of new crypto-treasury companies trading on the stock exchange, for violating its shareholder approval rules.

TON Strategy, a publicly traded marketing company that recently he changed his name and began to buy hundreds of millions of dollars of the cryptocurrency Toncoin, failed to get shareholder approval for the massive purchase of crypto, or for the private sale of stock shares that allowed the purchase, Nasdaq. warned the company at the end of last week.

Like many public companies that have gone all-in this year on massive crypto treasury purchases, TON Strategy (formerly Verb Technology) quickly raised funds for a large stockpile of digital assets via a private investment in public equity, or PIPE. PIPEs allow companies to sell their shares privately to institutional or accredited investors for quick fundraising.

In August, TON Strategy sold approximately $558 million of its shares via a PIPE, to purchase an equivalent amount of Toncoina cryptocurrency associated with the messaging app Telegram.

But the company did not receive the necessary shareholder approval for the PIPE financing or a subsequent $273 million purchase of Toncoin with funds derived from the deal, Nasdaq said.

Stock exchange officials determined, however, that TON Strategy did not deliberately intend to avoid compliance, and therefore opted only to issue a notice to the company, instead of removing the company’s shares.

Nasdaq officials noted their discovery that the company believed at the time it was navigating the PIPE financing deal well based on the advice of “external advisors.”

TON Strategy did not immediately respond Decryptrequest for comment on this story.

The incident highlights the blurred lines and rapid changes in norms that have accompanied Wall Street’s frantic embrace of crypto this year. All manner of publicly listed companies have changed their stated missions to buy billions of dollars of crypto this year, in bids to quickly boost stock prices on digital asset hype.

While such moves can increase a company’s stock price, such surges tend to be remarkably short-lived. Before changing its name to TON Strategy and going all-in on crypto accumulation, for example, Verb Technology was trading at around $9 in July. After buying hundreds of millions of dollars of Toncoin in mid-August, the company then saw its stock above $22.

That hype quickly faded, however, thanks in part to the latest in, first structure of PIPE financing business. TON Strategy stock is currently trading at $4.08, down nearly 82%.