Secure messaging service Telegram is canceling its initial coin offering (ICO), an anonymous source told The Wall Street Journal today, and it won’t be opening up its digital coins for public sale. The cancellation is a blow to public investors who hoped to get in on the ground floor of one of the largest cryptocurrency investment opportunities in history, with an estimated $1.7 billion already raised.
Another source cited in the Journal partially attributed the shutdown to increasingly tight regulations that the Securities and Exchange Commission, Commodity Futures Trading Commission, and other lawmakers have proposed since Telegram initially began planning an ICO.
Much has changed in the regulatory environment since January when rumors swirled that Telegram was contemplating an ICO. In February, SEC chairman Jay Clayton had harsh words for ICOs that dodged registering with the SEC. “Many ICOs are being conducted illegally,” Clayton said, testifying before Congress. “Their promoters and other participants are not following our security laws.” In March, reports surfaced that the SEC sent subpoenasto dozens of cryptocurrency companies including tech companies that had launched ICOs.
It could also be the case that Telegram has simply raised enough money in private sales that it no longer needed an ICO. Telegram’s first presale in February raised $850 million from 81 investors; in March, the company said it had successfully raised another $850 million from 94 investors in a second round. In total, Telegram raked in $1.7 billion from fewer than 200 private investors.
The money is supposedly going toward Telegram’s Open Network project that will continue to fund its messaging platform and develop new features. The network would be built with a public ledger that would eventually serve as an alternative to Visa or Mastercard, Telegrampromised.
The famous messaging service Telegram has unexpectedly cancelled its Initial Coin Offering (ICO), which was announced several times in the last months. The information has been revealed by The Wall Street Journal on May the 2nd.
One of the most important Initial Coin Offerings of all times has been cancelled. The Telegram Open Network (also known as TON), has been encouraging investors to place their money in one of the biggest opportunities for the year. Until now, the company raised $1.7 billion dollars.
Apparently, due to the tight regulations that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) may implement, Telegram decided to stop its plans to build the project.
Since TON has been announced, the SEC has sent subpoenas to different crypto-related companies, and informed that ICOs could be considered as securities. Back in February, SEC chairman Jay Clayton said that ICOs are being conducted illegally and that ICO founders are not following the security laws established.
At the same time, Telegram could have simply raised the money needed through its private sale. In this case, the company would no longer need an ICO. Between February and March, the company raised $1.7 billion dollars with less than 200 private investors. An important sum considering that some ICOs would just develop good products for less than half of this amount.
If Telegram’s ICO is suspended, it does not mean that its projects for the TON are totally cancelled. Indeed, it could be developing this product without necessary asking for more investments.
Telegram Open Network aims to create a platform that will handle transactions, that would be scalable, user friendly and that would provide its users with a virtual currency for transactions and other uses.
According to Anton Rozenberg, a former Telegram’s employee, the virtual currency would be used to aid users that live in oppressive governments, and the platform would be used to create smart contracts, among other things. Moreover, the company would launch a light wallet that would allow individuals to easily store their currencies.