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The SEC's complaint against the anonymous messaging platform Telegram has just been validated by the American authorities. The founder of the Telegram, Pavel Durov, announced on Tuesday in his public channel the abandonment of TON as well as his Gram token.
The biggest ICO in history
Telegram was founded in 2013 by brothers Pavel and Nikolai, creators of the popular social network VKontakte (the 'Russian Facebook'). According to its website, Telegram's development team is based in Dubai, while the company is registered in the British Virgin Islands. The social network has about 400 million users.
It is early 2018, rumors have indicated that Telegram is looking to create its own cryptocurrency and to launch a massive fundraising campaign in cryptocurrency (ICO) with this in mind. The launch of Gram would be a way for Telegram to equip its messaging system with a means of payment, but also to launch its own blockchain, called TON for Telegram Open Network.
So to launch its Gram cryptocurrency, Telegram had recourse to two ICO (Initial Coin Offering) fundraising events, in February and March 2018. Through two companies registered in the British Virgin Islands, Telegram founders brothers Pavel and Nikolai Dourov raised $850 million from 81 investors in March. Telegram's fundraising is known to have been one of the largest ICOs of all time. By the end of the second ICO, Telegram's TON project had raised $1.7 billion, mostly from 171 professional investors, funds and high net worth individuals, 39 of them from the United States. Among these were prestigious Silicon Valley funds such as Kleiner Perkins and Sequoia.
In October 2019, the US Securities and Exchange Commission (SEC) obtained an order from the US courts to temporarily block the fundraising of the Telegram encrypted messaging platform. The SEC had taken the case to court on the grounds that Telegram, which has already raised more than $1.7 billion for its cryptographic project, had failed to register its offer and terms with the Market Constable.
As a result, the courier cancelled a public fundraiser, making it necessary to wait until the official launch of the 'Gram' to obtain the new cryptogram. According to its website, Telegram's development team is based in Dubai, while the company is registered in the British Virgin Islands. Apart from the fact that the offer has not been registered, the SEC points out that Telegram has not disclosed to investors any information on its financial position or business plan. It also considers that the amount already raised far exceeds Telegram's needs to finance its virtual currency and to continue the development of its messaging system.
Disappointing S.E.C.?
Yes, it is official, after announcing the TON network and Gram tokens in 2017, Telegram is ending its participation in the project.
'Today is a sad day for us here at Telegram. We are announcing the discontinuation of our blockchain project.' wrote Pavel Durov, co-founder of Telegram. 'Telegram's active involvement with TON is over.'
In a post entitled 'What Was TON And Why It Is Over' the CEO of Telegram expresses his sadness. Mr. Durov said that they made the decision in response to a U.S. court that banned Telegram from distributing its Gram tokens not only in the country but around the world. The CEO said:
'Unfortunately, the U.S. court has shut down Project TON. How? Imagine if several people pooled their money to build a gold mine - and then later split the mined gold among themselves'
'Then a judge intervened and said to the builders of the mine: 'A lot of people invested in this mine because they wanted to make a profit. And they didn't want that gold for themselves, they wanted to sell it to others. For that reason, you're not allowed to go ahead with this project.'
This is a big change for Telegram, because as mentioned above, he said less than two weeks ago that he would launch the network in April 2021. In addition, at a public Q&A session on May 7 for those interested in the project, Ron Millow, Director of Sales at TON Labs, one of TON's third party developers who launched the fork chain, said:
'This is a community launch, a public launch organized by people who want to see Free TON working'.
In general, the Securities and Exchange Commission disapproves of crypto. In the case of Telegram, the SEC said that it believed that messaging would 'flood the markets with billions of... coins through an unregistered securities offering'. The SEC said that 'without a registration statement in place, Telegram's planned distribution would violate federal securities laws' and this virtually put a nail in the coffin of this blockbuster transaction.
Among his comments, Mr. Durov added:
Unfortunately, the American judge is right about one thing: 'We people outside the United States can vote for our presidents and elect our parliaments, but we are still dependent on the United States for finance and technology (fortunately not for coffee)'.
'So yes, it is true that other countries do not have full sovereignty over what they allow on their territory'.
In the end, Mr. Durov wished good luck to all those fighting for decentralization:
'I want to conclude this post by wishing good luck to all those who are fighting for decentralization, balance and equality in the world. You are fighting the right fight. This may well be the most important battle of our generation. We hope that you will succeed where we have failed'.
Written by Laetitia Harson
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