Telegram has scrapped ICO plans after record-breaking private fundraising, and plans a new form of digital payment system on their own network.
ICO isn’t needed after raising $1.8 billion in private funds
Telegram Group Inc. announced that it is ending plans for public fund raising since it has raised so much money from private investment. Originally the startup messaging service created by Russian brothers Pavel and Nikolai Durov planned to launch their public ICO for the gram coin in order to fund their Telegram Open Network (TON) but since they took in almost $2 billion in two rounds of private funding the ICO has been scrapped.
As was reported in the Wall Street Journal Telegram’s initial plans were to raise $1.2 billion dollars to build their TON network evenly split between private and public rounds of fundraising. After it raised a reported $850 million in its first round of private investment in February and then matched that number in another private round in March they decided to cancel the public funding round.
An unnamed source told the WSJ that it was because the regulatory environment had changed over that time period. That is the SEC has begun to focus on ICO’s which in this case could bring scrutiny onto company executives. Private fundraising isn’t subject to the same rigorous examination as a public round would be.
Money Will be Used to Expand the TON
Telegram has released a 23-page description of it’s updated plans since their private investment rounds. In it, they describe building out the technology for the TON network as well as further development and maintenance of its main messenger service. In addition the plans mention a “Visa/Mastercard alternative for a new decentralized economy,” to be based on their blockchain network.
Telegram has argued that current cryptocurrencies in the form of Bitcoin and Ether haven’t attracted a mass market due to structural flaws but with their access to such a large user base, they will be able to bring the new technology to a broader market.
Pavel Durov is the well-known face of Telegram who started the Russian equivalent of Facebook, VKontakte, which he sold in 2013 in order to start Telegram. Since then Telegram has gained over 200 million users and some controversy as well. Described as the messaging platform for criminals by some detractors because of its inherent encryption, Telegram is banned in the brother’s home country of Russia.
When the Russian government recently blocked 18 million IP addresses in the country in hopes of blocking the messaging service, Durov encouraged users to toss the companies signature paper airplanes out of their windows.
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