TON Strategy / Kingsway: a 2% market-cap fee, a 20-year term, stopped payments and termination without settlement.
TON Strategy Company's former Kingsway advisory agreement is a useful public control because the compensation denominator was not AUM. The recurring fee was tied to the company's fully diluted market capitalization, the initial term was 20 years, the provider was controlled by the company's Executive Chairman, payments stopped months before termination, and the relationship ultimately ended without a negotiated settlement.
Agreement snapshot
| Field | Publicly disclosed term |
|---|---|
| Agreement date | August 7, 2025 |
| Provider | Kingsway Capital Partners Limited |
| Role | Advisory and consulting services connected with the company's TON treasury strategy and broader business expansion / diversification |
| Setup fee | $3.0 million cash disclosed in the 2026 proxy summary of the original arrangement |
| Recurring fee | 2.0% per year of company market capitalization on a fully diluted, as-converted basis, payable monthly in arrears |
| Payment asset | Toncoin / Gram or cash by mutual agreement under the disclosed mechanics |
| Initial term | 20 years, followed by successive one-year renewal periods by mutual agreement unless earlier terminated |
| Related-party fact | Kingsway is controlled by Manuel Stotz, the company's Executive Chairman, and was also disclosed as a significant stockholder |
| Payment stop | Company says it stopped monthly payments in March 2026; last payment March 18, 2026 |
| Termination | Company notified Kingsway on August 10, 2026 that it had terminated the agreement without a settlement; both parties reserved all rights |
The denominator is the first benchmarking trap
A 2% fee tied to issuer market capitalization is not directly comparable to a 2% fee on treasury assets. The denominator can move for reasons unrelated to the size of the managed digital-asset pool, including changes in the issuer's equity value and fully diluted share base.
The contract became a live payment-status problem before it became an exit
The June 30, 2026 Form 10-Q states that the company recognized approximately $832,000 of advisory-fee expense for the second quarter and approximately $1.533 million for the first six months of 2026 under the monthly fee arrangement. The same filing states that the company had ceased making monthly payments in March.
That distinction matters. A decision-grade provider review should separately track contractual rate, expense recognized, amount paid, amount accrued or unpaid, and any disputed or reserved-rights status. Those fields can diverge while the agreement is still part of the public record.
The Board tried settlement first, then terminated without one
The Board authorized settlement negotiations in January 2026. By August, the company disclosed that those negotiations had not produced a settlement. On August 10 it terminated the agreement, with both sides reserving all rights. The company said it could not estimate the financial impact of the termination at that time.
This is exactly the kind of lifecycle sequence a static fee table misses: entry economics → payment status → attempted settlement → unilateral termination → unresolved financial impact.
The related-party structure belongs in the factual record
Kingsway was controlled by the company's Executive Chairman and was a significant stockholder. The existence of that relationship is a public governance fact; it is not by itself a fairness conclusion. It does, however, make role, compensation, approval history and exit mechanics especially important comparison fields.
A separate shareholder case adds another currentness layer
The June 2026 quarterly filing also describes shareholder litigation involving the 2025 PIPE and the Kingsway agreement, including a request to prevent further payments under the agreement. DAT Provider Research does not take a position on those allegations. For currentness work, the point is simply that contractual payment status, provider termination and external litigation can become intertwined and should be versioned separately.
Primary public sources
2026 proxy — original economics, term and 2025 payments
Form 10-Q for June 30, 2026 — related-party fee expense, payment stop and termination disclosure
August 10, 2026 Form 8-K — termination without settlement
Related research
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Public-source factual commercial research only. No legal interpretation of enforceability, no fairness or fiduciary conclusion, no accounting or investment opinion, and no recommendation concerning any provider or transaction.