Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
When everyone was still looking for a new story after the halving of Bitcoin, Telegram suddenly sent bad news, announcing the closure of its blockchain project TON, which made the currency circle sigh.
In the early morning of May 13, Beijing time, Telegram founder and CEO Pavel Durov tragically announced the news on Telegram: "In the past two and a half years, we have spent a lot of manpower and energy researching the underlying technology of the blockchain. It far surpasses the Bitcoin and Ethereum networks in terms of speed, scalability, etc. I am very proud and proud of the progress TON has made today, but now we have to announce the closure of TON due to the interference of the US court. "
Durov, who advocates privacy first, once wrote in his autobiography: "I am not fighting for freedom, but I use my existence to prove that freedom has not disappeared." Durov is an anti-authority rebel who is committed to digital privacy The construction and maintenance of , was blocked by the government because it strongly refused the Russian government's request to view the chat content in Telegram.
This time, TON, the "fifth-generation blockchain" that Durov is proud of, has repeatedly been "blocked" by US supervision.
In his letter to investors, Durov explained that the US court banned TON because it does not allow TON to sell its token GRAM to any investor in the US or around the world. GRAM, even more absurdly, the U.S. courts not only prohibit the sale of GRAM in the United States, but even prohibit the sale of GRAM in any country and region in the world."
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Telegram Deep in Legal Trouble With SEC
Since the US Securities and Exchange Commission (SEC) sued TON in October last year, Telegram has been deeply involved in legal disputes with the SEC.
In 2017, after five years of free operation, Telegram launched the blockchain project TON, hoping to establish an underlying blockchain operating system that is comparable to Ethereum. In early 2018, it raised $1.7 billion in private financing, with investors including Red Top venture capital and international investment institutions including Shanxi Capital, Benchmark, and KPCB. TON has also become the second largest financing project in the blockchain field.
In October 2019, when everything was ready and the TON mainnet was about to go live, the SEC gave TON a blow. The SEC suddenly announced a lawsuit against TON, filed "emergency actions and obtained temporary restraining orders" against two offshore entities involved in the private placement of its token GRAM, and described GRAM as an "online illegal digital asset securities sale" and stated that , if Telegram continues to sell GRAM, then regulators will determine that this behavior is illegal.
From the perspective of the SEC, if all ICO-related activities involve US users, there should be no situation where late-stage investors take over from early-stage investors through information gaps, otherwise, it will be regarded as securities. Even, the SEC believes that Telegram is selling tokens because it is short of cash and unable to pay for server fees, which is actually an alternative to equity financing.
In response to the SEC's emergency suspension of TON, Telegram filed a counterclaim the next day. The appeal notes that the SEC's emergency injunction is baseless and asks the federal court to deny the regulator's motion to take action. Telegram also argued that its upcoming GRAM token is not a security and that the SEC should not compel it to produce documents about the TON project and ICO data.
In addition, Telegram said in a letter to investors that it was surprised and disappointed that the U.S. Securities and Exchange Commission (SEC) chose to file a lawsuit against its token transaction, and claimed that it had been trying to negotiate with the SEC "for the past 18 months." negotiate.
However, the SEC did not back down on Telegram's appeal and decided to hold a hearing in February 2020 to sort out the case.
As for investors, Telegram has postponed the launch of the TON mainnet to April 30, 2020 based on feedback from investors.
During the preparation for the SEC hearing, Telegram also released a new version of TON's white paper, introducing the new consensus protocol Catchain.
On February 19 this year, the U.S. District Court for the Southern District of New York held another hearing on Telegram’s currency issuance. The hearing largely revolved around issues such as "whether the digital asset GRAM is a security" and "is it still a security after the official launch of the TON mainnet".
At the hearing, Telegram lawyer Alexander Drylewski stated that the SEC's Howey test does not apply to digital assets, and GRAM will no longer be a security after the launch of the TON mainnet.
However, the SEC still maintains its previous view. They believe that the $1.7 billion raised by Telegram for TON from investors is the issuance of a security that is not registered with the SEC and does not meet the Reg D standard of the US Securities Law (Odaily Note: Reg D is an early The traditional way for companies to raise capital, which presupposes that all investors are accredited investors), is therefore illegal.
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Telegram to refund $1.224 billion to investors
On April 29 this year, Telegram sent an open letter to its investors. The open letter shows that Telegram will postpone the release of its blockchain project TON for the second time, and the new launch date is tentatively scheduled for April 2021.
Telegram also stated in the letter that if investors do not agree to delay the launch of the mainnet and request a refund, Telegram will return 72% of the investment amount, or $1.224 billion, which was the first time TON delayed the launch of the mainnet in October last year. Content agreed with investors.
However, Telegram has always been a free product and has not yet made a profit. Durov also has to pay $1 million a month out of his own pocket to keep the business afloat. According to media reports, Telegram's business has always been in a state of burning money, and the source of operation and maintenance funds mainly depends on Durov's profits from other businesses and financing.
Once all investors choose to "cut meat" to exit the project and get back 72% of their investment, Telegram may have difficulties in paying.
However, Telegram is offering an alternative for investors, who can now lend their investment to Telegram, and investors will receive 110% of their original investment until April 30, 2021. The simple understanding is to exchange 10% interest for 1 year.
If investors choose to wait a year to exit the project, Telegram must pay investors approximately US$1.87 billion in principal and interest by April 30, 2021. According to the Telegram white paper, by April 2021, Telegram will consume about US$300 million in fundraising for project development, so by April 2021, the Telegram team should still have a remaining fundraising of US$1.4 billion. By the time it pays investors principal and interest next April, Telegram will have a funding shortfall of about $470 million.
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Can the GRAM futures you bought be refunded?
In addition to expressing regret for the "spiritual" closure of TON, those who are more concerned about the "immediate interests" are those retail investors who have purchased GRAM futures on the exchange.
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Image source: TON Chinese Community Group 1
Investors once had expectations and enthusiasm for the star project TON, coupled with the 50% discount purchase price for early investors, gave birth to a prosperous GRAM futures market.
When TON first announced its launch, many exchanges took the lead in launching GRAM futures through IOU (booking by the exchange rather than on-chain). Some exchanges cooperated with private investors of GRAM for sale, and some were self-purchased transfers. sale.
The full name of IOU is "I owe you", which means "I owe you". Through this form, the exchange sells futures that have not yet listed tokens, and promises to deliver real tokens after the project goes online. In short, IOU It is equivalent to an IOU guaranteed by the reputation of the exchange. Before the real token goes online, IOUs can only be traded in the exchange’s internal market, usually cannot be deposited and withdrawn, and lack of transaction depth, so the GRAM price of these exchanges has no practical reference significance.
Many investors in the TON official community began to buy GRAM futures in 2018. Wang Wenjun (pseudonym) once bought 10,000 GRAM futures at a unit price of US$1 on the Lbank exchange. Now the price of GRAM futures on Lbank is 0.1 USDT, the asset shrinks directly by 10 times.
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Cartography: Odaily
However, with the closure of TON, exchanges were unable to deliver real GRAM tokens to investors. Investors who bought GRAM futures before can't help but worry about whether their money will be returned.
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Odaily Frontline｜Telegram founder announced the closure of blockchain project TON
