Nasdaq Reprimands TON Strategy Over Shareholder Approval Violations in $272.7M Toncoin Deal

Executive Summary

TON Strategy received a Nasdaq reprimand for failing to obtain shareholder approval for a $272.7 million Toncoin purchase and related PIPE financing, prompting regulatory scrutiny while the company maintains its listing.

The Event in Detail

On October 28, 2025, TON Strategy Company received a Letter of Reprimand from The Nasdaq Stock Market LLC. This action closed a matter initiated due to the company's failure to obtain required shareholder approval for two significant transactions: a private investment in public equity (PIPE) financing finalized on August 7, 2025, and a purchase agreement dated July 31, 2025, for approximately $272.7 million worth of Toncoin.

Nasdaq determined that the asset acquisition violated Listing Rule 5635(a) because the issuance of common stock linked to the financing for the purchase represented 20% or more of the total shares outstanding before the issuance. Additionally, the related PIPE financing, which led to significant changes in senior management and the Board of Directors, including the appointment of a new Executive Chairman and the acquisition of a 19.99% voting stake by Kingsway, triggered a violation of Listing Rule 5635(b) for change of control without shareholder approval.

Despite these violations, Nasdaq acknowledged that the failures did not appear to be deliberate attempts to avoid compliance and that the company had not demonstrated a pattern of non-compliance. Consequently, the reprimand means the company's shares will remain listed on Nasdaq, avoiding delisting.

Financial Mechanics of the Deal

TON Strategy executed a $558 million PIPE transaction. The primary objective of this financing was to establish Toncoin as the company's main treasury reserve asset. Approximately 48.78% of the PIPE proceeds, equating to $272.7 million, were allocated directly to the acquisition of Toncoin. The PIPE transaction involved the pricing of approximately 58.7 million shares of common stock and saw participation from over 110 institutional and crypto-native investors, with Kingsway leading and Vy Capital, Blockchain.com, Ribbit Capital, and Graticule (GAMA) serving as anchor investors.

Business Strategy and Market Positioning

TON Strategy is actively pursuing a Web3 treasury approach by accumulating Toncoin, the native cryptocurrency of the TON blockchain. The company plans to utilize the majority of the net proceeds from the PIPE transaction to acquire Toncoin and establish it as its primary treasury reserve asset. This strategy involves ongoing staking and buyback programs to support the asset. This move aligns with a broader trend among some corporations exploring digital assets for treasury management, drawing parallels to companies that have integrated Bitcoin into their balance sheets.

Broader Market Implications and Toncoin Performance

The Nasdaq reprimand underscores increasing regulatory scrutiny on companies integrating cryptocurrency into their corporate finance strategies, particularly concerning shareholder approval processes for significant asset acquisitions and changes of control. While TON Strategy avoided delisting and remains committed to its Toncoin treasury strategy, the event highlights the importance of stringent compliance within this evolving sector.

Concurrently, the underlying asset, Toncoin (TON), has experienced significant market volatility. After reaching an all-time high of $8.27 in June 2024, the token has subsequently plunged by 57%, reducing its market capitalization from $18 billion to $8.8 billion. This downturn has been attributed in part to the arrest of TON project founder Pavel Durov on criminal charges. The TON ecosystem has also seen a decline in activity, with monthly active wallets dropping to 4 million from over 12 million in August 2023, and daily new wallet activations plummeting from 655,000 to 30,778. The Total Value Locked (TVL) in TON's DeFi protocols has fallen to $172 million, ranking it as the 37th-largest blockchain, reflecting broader investor sentiment and operational challenges within the ecosystem.