In a recent blog post, Pavel Durov, the co-founder of the Telegram messaging app, announced that the company had decided to quit all involvement with the TON blockchain network. The project, which raised $1.7 billion via an ICO, has been facing regulatory opposition from the SEC for months.
Unrelenting Legal Battles Force Telegram’s Hand
The last straw came when a judge issued an injunction barring the release of the TON blockchain and the Gram tokens. As a result, Telegram has decided to cut its losses. Following the ruling, Telegram announced that it would refund those who had invested in the project.
The SEC has been pursuing Telegram in US courts for a while. In 2019, it alleged that the $1.7 billion ICO for the Gram tokens in 2018 was an illegal securities sale. They managed to secure a temporary injunction against Telegram, which delayed the launch of the Telegram Open Network. Telegram had included a clause in the ICO, which promised investors they would get their money back if the project had not launched by April 30, 2020. When the date came, Telegram announced that investors would get their money back.
They Will Not Participate in Any Third-Party Projects
According to the blog post by Durov, Telegram, which has over 400 million users, will not participate in any third-party projects that launch based on the technology they designed for TON. Besides that, he added that it is likely they will not offer any material support to such projects.
He added that if anyone comes across a project using his name, the Telegram brand, or “TON,” you should not trust it with your data or money. Besides that, he said that no past or present members of the Telegram team involved in the TON project would be involved in such a project.
US Court Barred the Project from Launching Anywhere in the World
In his blog post, Durov criticized the decision by the US court preventing the Gram tokens from being launched not only in the US but outside the US as well. In the ruling, the judge explained that if the Gram tokens were allowed to launch, US citizens could still find a way of accessing them and the TON platform. As a result, even if another country allowed the TON project to launch, the Grams should not be allowed to launch.
He opined that the ruling implied other countries do not have full sovereignty when it comes to deciding what is good for their citizens. Durov gave the example of the US deciding to ban coffee and demanding that Italian coffee shops stop selling coffee since Americans might buy coffee there. He noted that it was doubtful anyone would agree with such a ruling.
According to Durov, the US had a huge influence on the global financial system. The massive amount of power it wielded could allow it to shut down any bank account or any bank globally. He also noted that the US could use its massive influence over Google and Apple to have any app removed from Google Play and the App Store. Durov noted in dismay that 96% of the global population was dependent on decisions made by lawmakers elected by 4% of the global population.
While Telegram has quite the TON project, it is unclear whether the company will avail the technology to any other company that might want to go ahead with it. The most likely outcome is that another company in another part of the world or in the US will take over the project and attempt to launch it while avoiding the legal pitfalls that befell Telegram.
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