Russian private equity fund manager Da Vinci Capital has filed a lawsuit against Telegram over a multi-million investment in the project that never materialized, local news outlet RosBusinessConsulting reported yesterday.
Filed in a London court, the lawsuit states that while Telegram did offer to return the funds invested in its Open Network to Da Vinci Capital, the messaging company made the proposal just 24 hours before the agreed deadline. The short notice made it difficult for investors to make an educated decision, claims Da Vinci Capital.
Da Vinci had previously sent Telegram a notice of intent to file a lawsuit against the company in February this year.
According to a filing with the SEC, Disruptive Era Fund—managed by Da Vinci Capital—signed an agreement to purchase $72.1 million worth of GRAM tokens back in 2018 and transferred at least $45.4 million to Telegram.
What was Telegram Open Network?
Formerly known as the Telegram Open Network, Open Network was Telegram’s first foray into the cryptocurrency space. It would operate similarly to WeChat and merge digital payments with messaging. Telegram launched an initial coin offering (ICO) in 2018 for the GRAM token and raised a whopping $1.7 billion to support the project's development.
Telegram was ultimately forced to abandon its plans in 2019 under pressure from the U.S. Securities and Exchange Commission (SEC) and promised to return the funds if the network didn’t launch by April 30 last year. It offered affected investors two choices: Get back 72% of the money invested immediately or lend the project the funds, and get back 110% in 2021.
The second option was not available to non-American investors, however.
Da Vinci claims that the fund received the offer "about 24 hours before the deadline," the fund’s managing partner Oleg Jelezko told RBC, leaving investors without an opportunity to analyze the documents properly.
A source close to Telegram's management told RBC that Da Vinci was given the option of converting the funds into a loan “immediately after the fund was able to confirm that it had no U.S. residents among the depositors," arguing that “Da Vinci was unable to provide such confirmation for a long time, so it reduced its own time to the deadline.”
Jelezko noted that after the SEC prevented the launch of Telegram’s crypto project, its investors received “quite a lot of conflicting notifications” about the token’s release date.
“There were a lot of difficult communication moments, and it was very difficult for investors to make the right decision about whether to take the money back or convert it into credit,” Jelezko explained.
RBC's source claimed that after filing the lawsuit, representatives of Da Vinci Capital tried several times to contact Telegram looking for an “amicable agreement,” but the messenger’s top managers “consider such claims absurd, therefore they did not show any interest in negotiations.”
Decrypt has reached out to Da Vinci Capital and Telegram for further comment but has yet to receive a reply at the time of press.