Telegram founder and CEO Pavel Durov decides to close down the Telegram Open Network (TON) and cryptocurrency project due to a long-winded regulatory battle with the U.S. Securities and Exchange Commission (SEC).
Telegram was forced to discontinue its blockchain project due to the strong arm of the SEC, who declared that the organization behind the encrypted chat application, could not distribute its cryptocurrency in the US or globally.
According to Durov,
“Unfortunately, a US court stopped TON from happening … the US court declared that grams [cryptocurrency] couldn’t be distributed not only in the United States, but globally.”
A U.S. judge supported the SEC’s standing that the gram cryptocurrency cannot be distributed in the U.S. or globally.
$1.7 billion was raised from investors for the project in 2018, during an initial coin offering (ICO). The SEC disrupted sales in October 2019, claiming that gram tokens were unregistered securities. Telegram offered investors two ways of paying them back. However, the U.S. investors may only be able to take 72% in refunds.
This is a big blow to the hopes of the Telegram team to create a blockchain that is faster and more efficient than the top three cryptocurrencies.
According to Durov,
“Ethereum blockchains do not have the capability to replace high-volume transaction mechanisms like credit cards and fiat currency”
Telegram is not the only blockchain project being strong armed by the SEC and other regulatory bodies. Earlier in the year, Kevin Hart was the subject of a $7 million claim with respect to an initial coin offering. Surprisingly, courts across the waters have taken a different approach to cryptocurrency in recent times. Reports reveal that a court in the Shanghai region of China ruled that Bitcoin is an asset protected by Chinese law. The ruling was made in a case involving the theft of cryptocurrencies.
