Telegram Open Network (TON) was an ambitious blockchain and cryptocurrency project created by Telegram, one of the largest messaging apps in the world. After some years of great expectations and ICOs, legal issues brought the project to its end in May 2020.
The abandonment of the TON project is a striking example of how governments can
arbitrarily destroy excellent cryptocurrency projects. This story must be told to every crypto supporter who believes that managing money freely is a right.
In this article, the Cripto InterCambio blog will explain the main aspects of the TON project and its cryptocurrency, GRAM, and why it was forbidden. Check it out!
Telegram Open Network (TON): Review
Telegram is a messaging application with more than 400 million users worldwide. It stands out as the most well-known privacy-focused messaging app. It uses a powerful encryption scheme in order to protect users’ privacy from hackers, spies, the government, and big tech companies.
With such a mission, it comes as no surprise that Telegram decided to create a new blockchain platform and a native cryptocurrency. Telegram Open Network (TON) would’ve integrated a decentralized blockchain network and a payment system within the messenger.
Moreover, TON and GRAM coin would be a way to sustain Telegram financially. After all, Telegram is completely free, and it does not sell data to other companies, nor display ads. The cryptocurrency could bring lots of money to the project.
But the crypto project didn’t happen, and Telegram remains single-handedly supported by its founder: Pavel Durov. He is a Russian entrepreneurwho, besides Telegram and the TON project, also created VK, which is the most famous social network in Russia. Regarding TON, Durov stated:
The technology we created allowed for an open, free, decentralized exchange of value and ideas. TON had the potential to revolutionize how people store and transfer funds and information.
Many people compare TON to Libra, Facebook’s cryptocurrency. Both were to integrate a virtual wallet into a messaging app. However, unlike Zuckerberg’s coin, Durov’s projects wouldn’t have had to suffer from lack of privacy.
Aside from that, TON and Libra share a common characteristic: both didn’t get realized due to problems with American justice. If you want to know what happened to the Facebook coin, check out our article about Libra. In the following lines, we will discover what happened to TON.
2017 was an important year for the cryptocurrency market. The second Bitcoin halving led to an epic bull run, which pumped its price to go from $1.000 in January 2017 to almost $20.000 in the first week of January 2018.
After such a bull run crypto and blockchain got the attention of mainstream media and a broader audience. Fueled by Bitcoin gains, many other coins also grew at a fast pace, and so did the total market capitalization of the crypto market.
In this context, many new cryptocurrency projects were born. In order to raise money, these new projects would do Initial Coin Offerings, aka ICOs, where new coins were sold to investors before the blockchain was fully operating. According to Business Insider, ICO’s raised more than $5.6 billion in 2017.
The truth is that there were many bad projects. They are now known as “shitcoins”. Nevertheless, there were a few projects with great potential, and Telegram Open Network was one of the best.
The $1.7 billion SAFT
Instead of offering coins before the launch of its blockchain, TON sold rights of property of coins. This process is known as SAFT, an acronym for Simple Agreement for Future Tokens. This strategy was used by Telegram as a way to avoid legal issues.
In the United States, ICO’s are regulated by the Securities and Exchange Commission (SEC). The SEC differentiates utilities and securities.
In a broad sense, utilities give the right of usage of an investment. They allow investors to set fees and obtain benefits from an existing business.
Securities, on the other hand, are investments made before the existence of a business. They are considered riskier and, for this reason, securities are subject to greater regulation by the SEC.
The problem is that securities are much more bureaucratic. They need a special license from the SEC and are subject to heavy regulation. By holding a SAFT instead of a traditional ICO, Telegram’s lawyers expected their coins to be considered utilities.
In the meanwhile, the TON project started to raise funds in the crypto community. With a big brand behind it and a very consistent project, many people bought the rights of property of Gram coins.
Telegram managed to raise $1.7 billion USD. A record!
But the SEC didn’t recognize the right of property of Gram coins as utilities. In their final verdict, they considered them to be securities. Telegram tried to appeal this decision, but it didn’t go through.
Beyond that, the SEC prohibited the distribution of Grams not only in the USA but globally!To justify that decision, they argued that, if the TON platform were launched, an American citizen could find a way to have access to Grams despite the prohibition. In that sense, a global ban would prevent this issue.
With all this, the TON project was discontinued in May 2020. Pavel Durov and his team decided to not support the project anymore and return the money invested during SAFT to investors.
Telegram Open Network – Conclusion
There are some initiatives to continue the original TON project, such as TON Labs, Free TON, NewTON, and so on. But none of these initiatives have the official support from Telegram.
Sadly, TON was discontinued, but its spirit will always remain in the memory of crypto enthusiasts all over the world. Surely, there will be other great crypto projects. As Durov stated on his blog:
I want to conclude this post by wishing luck to all those striving for decentralization, balance, and equality in the world. You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed.
Cripto InterCambio, a non-custodial crypto exchange, supports decentralization, privacy, and many other crypto initiatives. Take a look atour website to learn more about us!
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