"No TON ecosystem exists": why the SEC stopped the Telegram ICO and what this means for Durov`s project

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On Friday, October 11, the US Securities and Exchange Commission (SEC) achieved a temporary injunction against two offshore companies - Telegram Group Inc. and its subsidiaries TON Issuer Inc. registered in the British Virgin Islands and allegedly engaged in an initial offering (ICO) of Gram tokens. These companies were listed in documents filed with the SEC in February 2018. The SEC's statement was made shortly before the launch of the blockchain platform and the start of the sale of Gram to all comers. The launch of the platform was scheduled for October 31st. Otherwise, Durov's project should return the money to investors.

The Bell, citing a letter sent out on behalf of the messenger's management, reports that Telegram representatives are "surprised and disappointed" by the actions of the SEC. Telegram noted that they are considering various options for solving the problem, including the postponement of the release date of the cryptocurrency. However, it is not known if the legal bans in force in the United States can justify the postponement of the launch of the platform without a refund. What became known about Gram from the SEC lawsuit Telegram sold 2.3 billion coins in the first round and 639 million in the second. In both rounds, the company raised $ 850 million from private investors. Thus, a total of 2.9 billion Gram was sold for a total of $ 1.7 billion. buyers of the second round - $ 1.33 each. The market price of the coin at launch will be $ 3.62. However, even before the launch of TON, coins were selling for $ 4 in the secondary market. At the same time, Telegram provided "discounts" for the very first buyers: they will be able to buy the first coin at $ 0.10, after which the price will increase exponentially by one billion in value for each subsequent coin until it reaches the market value. This is the "TON formula". In the purchase agreement, the issuer undertook to issue and transfer Gram coins to investors by October 31, 2019, otherwise investors can get their money back minus costs. Of the $ 1.7 billion raised, the founders of Telegram spent $ 218 million by January 1 on the messenger and blockchain, in total it is planned to spend $ 520 million on development, that is, a third of the collected amount. The Securities Commission especially notes the fact that Durov and the team attracted much more investor money than needed for development. Durov was personally involved in marketing, attracting money from investors. For example, he wrote to one investor that the demand for "the third generation TON blockchain and its GRAM currency" will be driven by the availability of this currency for 170 million wallets, making Gram comparable to bitcoin and ether, which have far fewer wallets. A large number of Gram holders should provide profit to investors, as well as the functioning, growth and development of the ecosystem. One of the documents for investors referred to hundreds of millions of users. The SEC pays special attention to the number of users, and also notes that the documents for investors contained a promise to make the Telegram wallet the most popular in the world. In January 2018, TON representatives held a pitch for one American investor. According to them, the profit could be from 0X to 50X in the amount of investment. This unnamed investor invested $ 27.5 million in Gram coins, which were worth nothing at the time. The founders of TON in documents for investors promised high liquidity of Gram: the coin can be sold both to users of the messenger and on various crypto platforms. The SEC writes in its lawsuit that Durov's team has already made efforts to list the cryptocurrency on cryptocurrency exchanges. In particular, the Blackmoon Exchange, owned by one of the top managers of Telegram (Ilya Perekopsky, Vice President of Telegram - Forbes), announced that Gram will be traded on it immediately after the launch of the TON blockchain. Also, investors were promised low risk, stability and almost guaranteed growth in the price of the currency, it follows from the SEC lawsuit. The first buyers were also promised benefits from the use of cryptocurrency in the TON ecosystem. The SEC in its lawsuit says that "no" ecosystem "of TON exists and did not exist", as so far there are no goods that could be purchased with Gram. The functioning of TON, as stated by its creators, entirely depends on the money of investors, and they can only earn money by reselling their currency. Telegram has issued 500 million Gram (about 10% of the total issued cryptocurrency) to pay for products for the TON platform from third-party developers. Another 100 million Gram will be issued in favor of the Durov brothers, 100 million - for Telegram developers and about 1.4 billion (28% of issued Grams) - for other needs of the TON Foundation. Of these, 250 million Gram are going to be transferred to users of the messenger. By October 16, investors must receive crypto-addresses to which the currency will be transferred. To sum it all up, the SEC argues that the Gram is a security, not a currency that is going to be sold to a large number of investors. Such a sale requires a disclosure that Telegram has not done. If the Gram are issued, it will be difficult, if not impossible, to track down who acquired them, or to know who the investor of the project is at the moment, according to the SEC.

The defendants can file objections to the court on October 24, according to a document published on the website of the US legal framework Court Listner. Implications for American investors In the event that Durov and his team release an update on time, a wallet will have to appear in it. Distributing cryptocurrency to investors' wallets is a technical challenge. Therefore, when the cryptocurrency is credited, it will be impossible to return it, says Forbes one of the investors in Durov's cryptocurrency.

At the same time, legally, the SEC will no longer be able to present anything to Telegram, since the tokens will be sold by primary investors, and not by Telegram itself or offshore companies that have been banned, Internet Ombudsman Dmitry Marinichev explains to Forbes. American investors - according to the SEC lawsuit, there are only 39 of them - whose interests may suffer due to the ban, invested $ 424.5 million out of $ 1.7 billion in the project. In total, Durov attracted money from 171 investors. In theory, Durov can return the money to American investors, but he is unlikely to do so, two Forbes interlocutors, an investor in Gram and a source close to the developer of products for TON, note: “Of course, Durov does not want to return the money. Investors would not want this either - everyone wants to make money, ”the investor notes. Telegram planned to introduce KYC (Know Your Customer) requirement for service users in the future, however, the company itself stated that it would not have access to this information. In addition, it is not clear if the identification of the participants in the transaction will be available in the secondary market for Gram. Telegram can launch the platform without the participation of American investors, but the company will not know if there are US citizens among the users of the platform, for whom the Gram turnover may be prohibited, and will not be responsible for the circulation of currency in the country. At the same time, as Marinichev notes, in fact, Telegram did not conduct an ICO, but a private placement among a limited circle of investors. It was ICOs that have been banned since 2017. Cryptocurrencies as such are not prohibited in the United States. “In essence, this is an ICO, but in form a set of sequential actions that are logical and legal in each of its iterations,” noted Marinichev. “However, in the end, all together they will lead to the fact that millions of Gram will be poured into the US market and stop, let alone control this process, no one will be able to, including the SEC itself.” Consequences for TON It is unlikely that Durov is afraid of the SEC decisions - the founder of Telegram wrote in one of the platform updates that while the Telegram team was on a business visit to the Valley, regulators in the United States repeatedly made inquiries and tried to establish contact with company representatives, which Telegram continues to ignore, says Forbes is one of the investors in Telegram cryptocurrency. According to him, investors' money may not be in the accounts of blocked companies, but in the accounts of other offshore companies, for example, in Dubai, where Pavel Durov moved in 2017. “It is no coincidence that Durov chose Dubai as one of the platforms for the development of the platform. The UAE was one of the first countries where Telegram became popular. In this case, nothing will prevent TON from working, except for the legal consequences from the SEC, ”he continues.

Could the SEC really suspend the launch of TON? The SEC does not have sufficient tools to restrict the launch of TON, except for filing claims and significant claims against the messenger, Marinichev said. “The SEC gave Durov a stunning gift,” continues Marinichev. “And no matter what the size of the fine was assigned, it will still be significantly less than the marketing budget that would have to be spent on such a global PR effect”. Pavel Durov did not respond to a Forbes request.

Source: http://www.forbes.ru/tehnologii/385351-nikakoy-ekosistemy-ton-ne-sushchestvuet-pochemu-sec-ostanovila-ico-telegram-i-chto

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