Messaging service Telegram, which has a 400-million user base, announced that the Telegram Open Network (TON) project would be discontinued after a lengthy battle with the US Securities and Exchange Commission (SEC).
In 2018, Telegram raised $1.7 billion from two private sales of Grams, cryptocurrency tokens which were designed to power Telegram Open Network after its launch.
Later, the US SEC brought legal action against Telegram, accusing the company of launching an unregistered securities sale.
A federal judge, according to Cointelegraph, issued in March a preliminary injunction barring the launch of the company’s TON platform: “The Court … finds that the delivery of Grams to the Initial Purchasers, who would resell them into the public market, represents a near certain risk of a future harm, namely the completion of a public distribution of a security without a registration statement. An injunction, prohibiting the delivery of Grams to the Initial Purchasers and thereby preventing the culmination of this ongoing violation, is appropriate and will be granted.”
Telegram appealed the judge’s March decision and promised to roll out the TON platform by April 2021, offering investors a $1.2 billion refund or 110% a year after launch, according to TechCrunch.
However, several weeks later, Pavel Durov wrote in a blog post that th US court made it impossible for the messaging service to continue development of Telegram Open Network.
“How? Imagine that several people put their money together to build a gold mine – and to later split the gold that comes out of it,” he wrote. “Then a judge comes and says: ‘These people invested in the gold mine because they were looking for profits. And they didn’t want that gold for themselves, they wanted to sell it to other people. Because of this, they are not allowed to get the gold.’”
“If this doesn’t make sense to you, you are not alone – but this is exactly what happened with TON (the mine) and Grams (the gold). A judge used this reasoning to rule that people should not be allowed to buy or sell Grams like they can buy or sell Bitcoins,” he added. “Perhaps even more paradoxically, the US court declared that Grams couldn’t be distributed not only in the United States, but globally. Why? Because, it said, a US citizen might find some way of accessing the TON platform after it launched. So, to prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world – even if every other country on the planet seemed to be perfectly fine with TON.”
“Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US,” Durov added.
Durov referenced third-party efforts to launch independent versions of the TON blockchain, but said no Telegram employee is involved with these projects: “While networks based on the technology we built for TON may appear, we won’t have any affiliation with them and are unlikely to ever support them in any way. So be careful, and don’t let anyone mislead you.”