The Telegram Open Network (TON), the messenger Telegram’s blockchain project previously scheduled to launch on October 31 will not be here as soon as expected, the reason for it being legal hindrances.
Everything seemed to have been going smoothly when Telegram was able to raise $1.7B with its ICO during which the messenger’s Gram token proved to be quite in high demand among professional investors. However, recent developments in the legal sphere put the future of the Gram at risk.
Telegram, popular with privacy-minded people as a tool to increase the security of their online communication along with other instruments such as those that allow hiding real IP addresses, was sued over its ICO by the US Security and Exchange Commission (SEC) on October 12.
As specified in the statement issued by the Commission, the legal action was caused by the presumed illicitness of selling the Gram to the American public. The SEC believes that in doing so, Telegram and TON violated the Securities Act which prescribes providing a registration statement that contains all the necessary information about the securities (risks, operations, etc.). Telegram did no such thing when it sold the token. Therefore, the SEC insists on closing the operations before the Gram reaches the American mass consumer.
The court has so far agreed with the position of the SEC and issued a restraining order prohibiting Telegram to sell the Grams to the American public.
This hindrance is crucial for Telegram Group Inc. because the launch of its blockchain platform was so close. However, because of the SEC’s actions, the messenger had to agree to postpone the launch by five months. It did emphasize that it does not consider the accusations fair as the Grams are not, to its mind, securities.
Moreover, Telegram petitioned the court to rule some of the demands advanced by the SEC unjustified. Those demands concern providing additional information to the Commission.
Its essential ban in the USA is a heavy hit for the TON. According to the statement of the SEC, approximately one-third of tokens were sold to the American investors.
The management of the company reacted to it by giving the Gram owners a choice: either to agree and wait for five more months until the platform launch or get a partial refund of the invested funds. Two-thirds of the capital will be refunded in this case.
Either way, the situation does not look good for the Telegram’s blockchain plans. On the one hand, the financial side of this problem is obviously not playing to their expectations. On the other hand, such legal troubles are bound to make potential investors wary and think twice about getting the Gram even in the countries where it is still possible to do.
The Russian billionaire and bank-owner Oleg Tinkov was quick to use the situation around the Gram as an argument against cryptocurrencies in general. He thinks that the only way for a cryptocurrency to actually work unhindered is not to threaten the US dollar.
Whether he is right or not, only time will tell. For now, however, the TON’s future remains uncertain.