Telegram Messenger LLC, an encrypted-messaging startup, has preferred to cancel its initial coin offering (ICO) to the public. The company has raised about $1.7 billion through its pre-sale exercises from about 200 private investors. The cryptocurrency market has recovered somewhat in April and May from the worst seen in the first quarter after regulators started tightening their screws. Therefore, the market conditions cannot be a reason for the company to cancel its ICO. Interestingly, the company has not disclosed that it has postponed it.
Satisfied With Pre-Sale
A telegram has been involved in funding raising exercises at least two times in the current year itself. The pre-sale of its ‘Gram’ token was first announced in January resulting in $850 million. While the first pre-sales of its coin closed on February 18, there was another pre-sale of $850 million that commenced to close on March 29. The company originally intended to raise $2 billion totally. This was to be done in two phases, the first being the pre-sale and the second through public ICO. The public offering would have enabled anyone to acquire the digital token to boost the cap.
However, Telegram felt that it has already raised sufficient money from the pre-sale. Also, the company wanted to avoid the examination of its public ICO. The Securities and Exchange Commission (SEC) has been keeping a close watch on the ICO and wanted to ensure that bad actors are eliminated from the scenario. The regulator is also keen to protect investors’ interests as it believes that the tokens fall under its purview of regulation. The SEC termed tokens as securities.
A telegram has made it clear that its objective is to create a ‘third-generation’ blockchain known as TON with the help of $1.7 billion war chest. The company would make use of the Gram token for transactions. The messaging app firm used different buzzwords on the planned technology and termed it as an open network. As a result, it could be an alternative to Visa/Mastercard for a new decentralized economy.
However, there are others who are not ready to buy such arguments and remain skeptical. For instance, analyst, Jason Bloomberg, termed Gram token as a “scam among cryptocurrency scams.” He claimed that fundraising exercise was nothing but an attempt with no revenue to continue trading, siliconangle.com reported. He believes that Telegram does not have a viable business model. That is because it is not generating any money.
Whatever skeptics might have on the proposals of Telegram, it might be early to think that the cryptocurrency has matured. It is possible that the company may come back with its ICO once the regulator provides more clarity on the status of the digital coins. However, those who have invested in the pre-sale might look for value in it.
A telegram has not officially indicated any names in the pre-sale ICO. However, reports suggested about billionaire from Russia, Roman Abramovich, and Silicon Valley Venture Capital firms, Benchmark and Sequoia Capital has participated in the pre-sale. Wimm-Bill-Dann foods founder, David Yakobashvili also participated in the pre-sale fundraising exercise.