Telegram, having agreed last week to hand over all bank statements about its $1.7 billion ICO, has abandoned its TON blockchain project. The decision comes after mounting legal ramifications coupled with the more aggressive stance taken by the US regulators, which ultimately made Telegram executives reconsider their crypto ambitions altogether.
“Today is a sad day for us here at Telegram. We are announcing the discontinuation of our blockchain project. 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,” said Pavel Durov, the founder and chief executive of Telegram.
He continues: “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,” Durov added.
Durov also confirmed that Telegram’s involvement with TON is over and warned from sites that may exploit their exit though impersonating his name, Telegram brand or the “TON” abbreviation to promote their projects.
Telegram already abandoned critical parts of the project
Telegram CEO also blasted the court’s ruling that found the resale of Grams into the secondary public market would be an integral part of the scheme that involves US purchasers and thus likely securities laws would apply. The rejection centered around the same claims that supported the preliminary injunction, including whether Telegram could flood United States markets with billions of Grams and if the token itself is a “security”.
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A US court has ruled earlier that three Telegram executives, including CEO Pavel Durov, should testify in the case filed against the company by the SEC at a location mutually agreed by both parties.
Following the increased regulatory crackdown, Telegram said earlier it may abandon some of the most critical parts of its crypto strategy. For one, the popular app publicized plans that it will no longer integrate its Gram token into the Telegram Messenger, basically offering the wallet solely on a stand-alone basis.
Most recently in the ongoing legal battle, Telegram agreed to disclose financial documents and answer the SEC’s questions that should shed more light on the disposition of investor funds.
The decision comes after months of back and forth where Telegram’s lawyers previously requested that the application be thrown out, calling it an “unfounded fishing expedition.” These documents, the agency hopes, will demonstrate how much Telegram has spent from the funds it collected in two token sales conducted in early 2018.
Telegram had been fighting the suit since October 2019, claiming its grams are utility tokens, outside the US authorities’ purview. After several months of back and forth, during which the cryptocurrency community speculated regarding the potential outcome of the conflict, the court order got in line with the SEC’s key arguments.
“Sadly, the US judge is right about one thing: we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world. It can use its control over Apple and Google to remove apps from the App Store and Google Play. So yes, it is true that other countries do not have full sovereignty over what to allow on their territory. Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US,” the CEO concluded the saga.