“A US court stopped TON from happening:” with this simple explanation, VK and Telegram founder Pavel Durov announced today he is giving up his widely hyped blockchain and cryptocurrency project.
This is the latest, but probably not the last episode of a saga which started in early 2018 with a controversial $1.7 billion ICO. Many unforeseen developments followed, including:
- A lawsuit from the US Securities and Exchange Commission, which sees in the ICO an unregistered securities sale;
- A subsequent ruling from a US judge saying that Telegram could not launch its blockchain or issue the Gram tokens until the SEC’s lawsuit would be resolved;
- Several postponements of the release date, which fuelled doubts about TON’s completion level and technical robustness;
- More recently, a stunning series of zigzags in refund offers to investors.
Nevertheless, the Russian tech guru says today he is “very proud with the [achieved] result,” which he describes as “a technology allowing for an open, free, decentralized exchange of value and ideas.”
Durov maintains that Gram, his stillborn cryptocurrency, was set to be “vastly superior to [Bitcoin and Ethereum] in speed and scalability.” This provided the “potential to revolutionize how people store and transfer funds and information.”
Shifting the blame
Attributing TON’s global failure to the legal obstacles encountered in the USA, Durov complains that “96% of the world’s population living [outside the USA] are dependent on decision makers elected by the 4% living in the US.”
The Russian-born entrepreneur sees in this situation “a vicious circle,” where “you can’t bring more balance to an overly centralized world exactly because it’s so centralized.”
By shifting the blame merely to “a US court,” Durov falls short of explanations on such essential questions as:
- Why were the legal risks so poorly anticipated when raising $1.7 billion on the project?
- How could more than $400 million be spent on the project with no proven result to date?
- Why did the company continue burning cash during seven months after the SEC’s lawsuit was filed – from October 2019 to May 2020?
- Why did the company changed so many times the planned release date of the platform – including before and after the SEC’s lawsuit and the US court decision which followed it?
In the past few days, even before Durov announced the end of the project, Telegram changed again – for the fourth time since October 2019 – the terms of its refund offer to investors. As reported by Forbes Russia, these may now hope to get back from 72% to 110% of the invested amounts, in money or Telegram equity.
Investors who spoke to The Bell, a major Russian online publication, had various reactions. Some say they are prepared to wait for compensation, while others believe Durov will be unable to pay them in a year. Some others – like Russian investor Pavel Cherkashin, who also exchanged with East-West Digital News – are considering lawsuits in an attempt to secure more compensation than what is currently on the table.
