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Telegram closes its Cryptocurrency operation

Telegram closes its Cryptocurrency operation - Appy Pie

Cloud-based messaging platform Telegram has decided to shut down its Telegram Open Network (TON). It was launched about 2 years ago, TON offered a decentralized cryptocurrency called Gram for peer-to-peer exchange and payments via smartphones.

The company took closure decision over legal conflicts with the US Securities and Exchange Commission (SEC). The founder and CEO of Telegram Pavel Durov said, “A US court has stopped the TON project and prevented the gram Cryptocurrency from being distributed to investors, not just in the US but globally.”

Telegram has been in a long battle with the US Securities and Exchange Commission. In October 2019, the SEC had sued Telegram and ordered it to halt sales of Cryptocurrency. SEC had appealed to Telegram to reveal how it will spend the USD 1.7 billion it raised in its initial ICO (coin offering).

However, the company had failed to register an early sale of USD 1.7 billion in tokens before the launch of the TON network. Telegram raised funds in a series of what the company billed as pre-ICO offerings back in the year 2018, although it ended up canceling the ICO due to the increased SEC scrutiny on its project.

Both parties – Telegram and SEC – filed a case for judgment. The court granted SEC’s restriction against Telegram. The court stated in its judgment that the Gram could not be distributed in the United States or globally. Following the court orders, Telegram had to put an end on developing TON when it reached 400 million users.

As per the judge, “A US citizen might find some way of accessing the TON platform. To prevent this, grams should not be allowed to be distributed to investors in the US and worldwide.”

On the judgment, Durov said, “We have made the difficult decision not to proceed with TON, because of the US court’s finding.” But he noted that the company could alter the decision in the future.

Durov is against the ruling and he favored his argument saying, “US courts should not be given the power to stop the sale of cryptocurrency outside its borders.”

To support his argument he further added, “We are still dependent on the US in case of finance and technology. The US is using its control over the dollar and the global financial system to shut down any bank or bank account in the world.”

Durov has even warned all his investors saying, “You may see, or may have already seen, websites using Telegram brand or the TON abbreviation to promote their projects. Don’t trust them with your money or data.”

The developers of TON even assert that their blockchain would be fast and far more efficient than the existing Bitcoin and Ethereum blockchains.

According to Durov, “Bitcoin and Ethereum blockchains cannot replace high-volume transaction systems like credit cards and fiat currency.”