Nasdaq has officially reprimanded TON Strategy for violating listing rules related to its $272.7 million purchase of Toncoin and associated PIPE financing. The company, formerly known as Verb Technology Company, failed to obtain shareholder approval before issuing stock to finance the deal, according to a recent SEC filing.
In brief
- TON Strategy failed to get shareholder approval ahead of a major stock issuance for its $272.7M Toncoin deal.
- Nasdaq ruled that the company violated listing rules but found no intent to deceive or mislead investors.
- Nearly half of the proceeds from the PIPE funding were used to acquire Toncoin, exceeding compliance thresholds.
- The company has undergone restructuring and management changes as Nasdaq confirms that no further disciplinary action will be taken.
TON Strategy under scrutiny for violating issuance rules in its Toncoin deal
TON Strategy, which accumulates Toncoin tied to the Telegram blockchain, received the reprimand after Nasdaq determined the company violated requirements for issuing shares. Under Nasdaq rules, companies must obtain shareholder approval when issuing shares representing at least 20% of their total outstanding shares.
In an 8-K filing submitted Wednesday, Nasdaq said TON Strategy failed to comply with this requirement when executing a private investment in public shares (PIPE) to acquire Toncoin. The exchange called the violation a breach of the rule but noted that the actions were not deliberate.
Nasdaq does not report intentional misconduct but points to governance failures
On August 4, Verb Technology announced a $558 million PIPE financing to form a publicly traded TON Treasury Strategy company in partnership with Kingsway Capital. The financing closed three days later, following the issuance of pre-funded common shares and warrants under an August 3 underwriting agreement.
Approximately 48.78% of PIPE proceeds were allocated to the Toncoin acquisition — a threshold that triggered the shareholder consent requirement.
Key points of the filing include:
- TON Strategy allocated almost half of its PIPE funds to purchase Toncoin.
- Nasdaq determined that the size of the issuance exceeded compliance thresholds.
- The company completed a major restructuring during the closing period of the transaction.
- Former TON Foundation President Manuel Stotz has been named Executive Chairman.
- Nasdaq considered the violations unintentional, thus ruling out delisting as a sanction.
In its letter, Nasdaq confirmed that no further action would be taken, concluding that these compliance failures did not arise from an intention to circumvent regulatory obligations.
The rebuke comes weeks after CEO Veronika Kapustina warned that digital asset treasury companies, several of which launched earlier this year, were starting to show signs of overheating in the market early last month.
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