Nasdaq Reprimands TON Strategy for Listing Rule Breach
Nasdaq has reprimanded TON Strategy, the company that manages a Toncoin accumulation vehicle linked to Telegram’s blockchain, for breaching listing rules tied to its recent financing and token purchases. The exchange issued a formal letter of reprimand following TON Strategy’s $272.7 million Toncoin acquisition and related private investment in public equity (PIPE) deal. According to an 8-K filing with the U.S. Securities and Exchange Commission on Wednesday, Nasdaq found that TON Strategy failed to seek shareholder approval for the issuance of new stock used to finance the Toncoin purchase. The exchange said the transaction required a vote because the issuance exceeded the 20% threshold of outstanding common shares under Nasdaq’s rules. TON Strategy, formerly known as Verb Technology Company, was transformed into a digital asset treasury vehicle earlier this year after the company’s rebranding and pivot toward blockchain-based assets. Its shares trade on the Nasdaq under the ticker TON.
Investor Takeaway: Scrutiny on Crypto Purchases via PIPE
Nasdaq’s reprimand highlights the scrutiny facing listed firms using PIPE structures to fund large crypto purchases. While no delisting action followed, exchanges are signaling closer oversight of token-related balance sheet strategies.
PIPE Financing and Toncoin Allocation Details
Verb Technology announced the $558 million PIPE financing on Aug. 4 as part of a plan to establish a publicly traded TON Treasury Strategy Company in partnership with Kingsway Capital. The transaction closed three days later, on Aug. 7, after the company issued common stock and pre-funded warrants under a subscription agreement dated Aug. 3. Regulatory filings show that 48.78% of the PIPE proceeds were used to fund the Toncoin purchase. Because the share issuance represented more than one-fifth of the company’s outstanding equity, Nasdaq determined that shareholder approval was mandatory. The company proceeded without securing it, triggering the reprimand.
TON Strategy also underwent major restructuring on the same day, appointing Manuel Stotz, a former president of the TON Foundation, as executive chairman. The move was part of a broader leadership transition accompanying the company’s pivot toward digital asset management.
Nasdaq's Decision and Outcome
While citing compliance failures, Nasdaq concluded that TON Strategy’s actions were unintentional and did not reflect an effort to sidestep the rules. The exchange said it viewed delisting as unnecessary. “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 stated in the filing. The reprimand ends the regulatory inquiry, with no further action expected. Still, the episode underscores the complexity of combining digital asset strategies with public market structures. Nasdaq has tightened oversight of cryptocurrency-linked firms amid concerns over transparency, shareholder rights, and valuation methodologies for token holdings.
Investor Takeaway: Adapting to Market Standards
The case reflects the learning curve for publicly traded crypto treasury firms adapting to U.S. equity market standards. Future token-linked financings are likely to draw deeper review from exchanges and investors alike.
Market Context and Industry Reaction to Digital Asset Treasuries
The reprimand follows a busy quarter for digital asset treasury vehicles. Earlier this year, OceanPal announced plans to raise $120 million to create a similar token treasury focused on the NEAR blockchain, part of a trend in which listed firms are repurposing corporate structures to hold crypto assets directly. TON Strategy’s compliance issues surfaced weeks after its CEO, Veronika Kapustina, warned that digital asset treasuries were showing signs of a valuation bubble as of early October. Several of these entities have seen share price volatility driven more by token market swings than by operating results, a dynamic that is drawing attention from regulators and institutional investors. The company’s partnership with Kingsway Capital and ties to Telegram’s TON ecosystem have fueled speculation that Toncoin could become one of the few blockchain tokens integrated with mainstream corporate balance sheets. The Nasdaq reprimand, however, may slow further capital deployment into Toncoin-related strategies until compliance mechanisms are fully clarified.