Nasdaq Reprimands TON Strategy for Toncoin Purchase Amid Shareholder Approval Lapse

• Nasdaq issued a formal letter of reprimand to TON Strategy over Toncoin acquisition rules.

• The PIPE financing involved $558 million, with nearly 49% allocated to buying Toncoin tokens.

• Shareholder approval was required but not obtained, per SEC 8-K filing data from August 2024.

Nasdaq reprimands TON Strategy for Toncoin purchase violations in $272.7M deal. Learn key details on shareholder rules, PIPE financing, and crypto treasury implications. Stay informed on regulatory shifts in digital assets.

What is the Nasdaq Reprimand Against TON Strategy?

Nasdaq reprimanded TON Strategy for violating shareholder approval requirements in a major Toncoin purchase and related private investment in public equity (PIPE) financing. The exchange issued a letter highlighting the company’s failure to obtain necessary approvals before issuing stock that represented over 20% of its outstanding shares, as detailed in an 8-K filing with the U.S. Securities and Exchange Commission. This action underscores Nasdaq’s strict oversight of public companies engaging in cryptocurrency-related transactions.

How Did TON Strategy’s PIPE Financing Lead to the Violation?

TON Strategy, formerly known as Verb Technology Company, announced a $558 million PIPE financing on August 4, 2024, in partnership with Kingsway Capital to build a publicly listed TON Treasury Strategy Company focused on accumulating Telegram-linked Toncoin tokens. The financing closed on August 7, 2024, involving the issuance of common stock and pre-funded warrants under a subscription agreement dated August 3. Nasdaq determined that 48.78% of the PIPE proceeds—amounting to $272.7 million—were used to fund the Toncoin purchase, triggering the need for shareholder approval since it surpassed the 20% threshold of total shares outstanding. The company also underwent significant restructuring on the closing date, appointing Manuel Stotz, a former president of the TON Foundation, as executive chairman.

According to the SEC filing, these steps were part of broader efforts to establish a dedicated treasury strategy for Toncoin, but the oversight in approval processes drew regulatory scrutiny. Nasdaq’s review concluded that the violations stemmed from unintentional errors rather than deliberate evasion, leading to a reprimand without further penalties. Experts in financial compliance, such as those cited in regulatory analyses by the SEC, emphasize that such thresholds exist to protect investor interests in equity dilutions, particularly in volatile sectors like cryptocurrency.

TON Strategy’s CEO, Veronika Kapustina, has previously commented on the emerging trends in digital asset treasuries, noting in early October 2024 that several launches this year suggest early signs of a market bubble. This context highlights the rapid evolution of corporate crypto strategies amid increasing institutional adoption.

Frequently Asked Questions

What Are the Implications of Nasdaq’s Reprimand for TON Strategy’s Future Toncoin Purchases?

Nasdaq’s reprimand serves as a formal warning, requiring TON Strategy to adhere strictly to shareholder approval rules for future issuances exceeding 20% of outstanding shares. The company faces no immediate delisting or additional sanctions, but must implement better compliance measures to avoid escalating penalties, ensuring transparent governance in its Toncoin accumulation efforts.

Why Is Shareholder Approval Required for PIPE Financings Involving Cryptocurrencies?

Shareholder approval is mandated under Nasdaq rules when stock issuances in PIPE deals dilute existing shares by 20% or more, preventing unfair advantages to select investors and protecting minority shareholders. In cryptocurrency contexts like Toncoin purchases, this ensures decisions on volatile assets reflect broad consensus, promoting market integrity and investor confidence.

Key Takeaways

• Regulatory Oversight in Crypto Treasuries: Nasdaq enforces strict rules on equity issuances for digital asset acquisitions, as seen in TON Strategy’s case, to safeguard shareholders from dilution risks.
• Unintentional Violations Avoid Harsh Penalties: The exchange deemed TON Strategy’s errors non-deliberate, opting for a reprimand over delisting, but stressed the need for proactive compliance.
• Growing Corporate Crypto Adoption: This incident highlights the challenges and opportunities in building Toncoin-focused treasuries, urging companies to integrate regulatory checks early in financing strategies.

Conclusion

The Nasdaq reprimand against TON Strategy for its Toncoin purchase underscores the critical need for compliance in PIPE financings within the cryptocurrency sector. By failing to secure shareholder approval for a deal representing nearly 49% of proceeds, the company faced regulatory action, though mitigated by its unintentional nature. As digital asset treasuries proliferate, firms must prioritize governance to navigate Nasdaq rules effectively. Looking ahead, enhanced transparency could foster sustainable growth in Toncoin and similar ecosystems, benefiting investors in this dynamic market.

Nasdaq has reprimanded TON Strategy for its $272.7 million Toncoin purchase and PIPE deal, citing missed shareholder approval rules.

TON Strategy, a publicly traded company that accumulates Telegram-linked Toncoin tokens and previously operated as Verb Technology Company, has been reprimanded by Nasdaq over rule violations related to its Toncoin purchases.

Nasdaq has issued TON Strategy a letter of reprimand in connection with its $272.7 million Toncoin purchase and associated private investment in public equity (PIPE) financing.

According to Nasdaq, TON Strategy failed to obtain shareholder approval for stock issuance under the PIPE financing to purchase Toncoin (TON), Nasdaq stated in an 8-K filing with the US Securities and Exchange Commission on Wednesday.

Nasdaq highlighted that shareholder approval is required when the issuance of common stock represents at least 20% of the company’s total shares outstanding.

49% of PIPE financing used

Verb Technology Company announced a $558 million PIPE financing on Aug. 4 to establish a publicly listed TON Treasury Strategy Company in partnership with Kingsway Capital.

The PIPE financing closed on Aug. 7, following issuance of common stock and pre-funded warrants under a subscription agreement dated Aug. 3. Because 48.78% of the PIPE proceeds were used to fund the Toncoin purchase, shareholder approval was required but not obtained, the filing said.

It also mentioned that on the closing date, TON Strategy also completed significant restructuring, including the appointment of new executive chairman Manuel Stotz, a former president of the TON Foundation.

While highlighting compliance failures, Nasdaq concluded that TON Strategy’s rule violations were unintentional and not an attempt to avoid compliance.

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“Those failures did not appear to have been the result of a deliberate intent to avoid compliance, and that, as such, the staff believes that delisting the company’s securities is not an appropriate sanction,” Nasdaq said, adding that there is no further action required.

The news came weeks after TON Strategy CEO Veronika Kapustina said digital asset treasuries — several of which have launched this year — were beginning to show signs of a bubble as of early October 2025.

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