Telegram has ended its dealings in cryptocurrency. An encrypted messaging service, Telegram initially announced a token sale of its new “GRAM” token, which garnered the company more than $1 billion in additional funds, but thanks to a longwinded fight with the Securities and Exchange Commission (SEC), it looks like the GRAM is never going to get off the ground.
The Battle Is Lost for Telegram
The GRAM token was supposed to work in cahoots with the company’s new TON blockchain. Customers of the Telegram messaging service would be allowed to utilize the token as a means of payment for goods and services via the blockchain. Both entities would form an entirely secure payment system that would be comparable to credit cards like Visa and Mastercard.
Sadly, it doesn’t look like the project was meant to be. In a statement, Telegram founder Pavel Durov explained:
We are announcing the discontinuation of our blockchain project… The United States can use its control of the dollar and the global financial system to close any banks or bank account in the world.
He later commented that this was indeed a “sad day” and that the decision to close down was “unfortunate.”
The SEC has been relentless in its fight against token sales and ICOs (initial coin offerings). The idea is that if the coins being sold or traded share even the slightest similarities with standard securities, the sales must be reported and fully registered with the governing body, and all companies who fail to do so are likely to face severe penalties, including fines, suspensions, and even temporary shutdowns.
Telegram is not the first victim of the SEC (and it probably won’t be the last), but it’s certainly among the largest. It is estimated that the token sale of the GRAM garnered the company as much as $1.7 billion in official funds from more than 200 separate investors.
However, it wasn’t long before the SEC caught wind of what Telegram was up to. Reporting that the GRAM token was similar with a security, the SEC filed suit against Telegram and brought legal action against its owners, saying that the sale had not been properly registered. It was later ruled that the GRAM tokens that had not been distributed as of late must be placed on hold before legal decisions had been made.
Throwing in the Towel
In March of this year, a ruling came from a federal judge who stated that the project was not allowed to continue further until the SEC and Telegram had settled their differences. In anticipation of the battle lasting a good, long while, the makers of Telegram have decided to pull the plug on their own project.
At six years of age, Telegram was launched in 2013 by Russian brothers Pavel and Nikolai Durov. It currently boasts more than 400 million uses worldwide.