Telegram announced Tuesday that it will be shutting down its blockchain operation TON (Telegram Open Network) and accompanying cryptocurrency Gram; the decision came after legal conflicts with the Securities and Exchange Commission (SEC). TON was a blockchain platform for Gram, a decentralized cryptocurrency, which was designed to be offered to anyone with a smartphone. This was designed to be similar to Facebook’s Libra, which has also faced regulatory scrutiny. Telegram stated it wanted to make “an open, free, decentralized exchange of values and ideas.”
Telegram founder Pavel Durov stated in a blog post that “Telegram’s active involvement with TON is over. You may see – or may have already seen – sites using my name or the Telegram brand or the “TON” abbreviation to promote their projects. Don’t trust them with your money or data.”
The announcement comes after Telegram’s long battle with the SEC. The SEC sued Telegram in October 2019 because Telegram failed to register early sales of Gram and in January 2020 as a securiy. The SEC requested that Telegram disclose how it spent the $1.7 billion it raised in its initial coin offering (ICO). Both parties filed for summary judgment in January. In March, the court granted the SEC’s injunction against Telegram. The court also stated that Gram could not be distributed in the United States or globally. Telegram ceased developing TON as it reached 400 million users.
Durov spoke out against the court’s decision. He criticized the court’s idea that TON and Gram must be banned worldwide because “a US citizen might find some way of accessing the TON platform after it launched. So, to prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world – even if every other country on the planet seemed to be perfectly fine with TON.” Durov noted the power the United States has in relation to the rest of the world. He wrote “we are still dependent on the United States when it comes to finance and technology… The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world.” He argued that the U.S. courts should not have the ability to stop cryptocurrency sales outside of the United States. Durov has encouraged others to fight the battle for decentralization. He added, “[t]his battle may well be the most important battle of our generation. We hope that you succeed where we have failed.”
This announcement comes after Telegram previously stated it would launch TON by April 2021 and provide investors with a $1.2 billion refund out of their initial $1.7 billion or 110 percent a year after TON launches.