Telegram founder says the TON project is over

Telegram founder Pavel Durov announced that the company has opted to no longer proceed with the TON project. After raising $1.7 billion in a pair of 2018 SAFTs, Telegram ran into series of regulatory hurdles that began when the U.S. SEC halted the initial distribution of GRAMs last October. A U.S. federal judge then sided with the SEC in Mar. 2020, preventing Telegram from issuing tokens to U.S. investors. This ban was later extended to include all investors because the court ruled that Telegram could not effectively fence off U.S. investors.

In today’s post, Durov took aim at the U.S., saying it has undue financial and technological influence over the rest of the world. He specifically mentions that the U.S. uses its control over the dollar and tech giants like Apple and Google to decide “what is good and what is bad” for other countries. Thus, these countries “do not have full sovereignty over what to allow on their territory,” and instead, are dependent on U.S. decision-makers.

Why it matters:

• What does this mean for investors? TON backers will be able to recoup at least 72% of their initial investments, which amounts to about $1.2 billion, per the most recent investor agreement. But Durov’s post did not address how and when the company would refund investors. There is also some remaining uncertainty around Telegram’s new offer to non-U.S. CoinDesk and Russian news outlet The Bell both reported that Telegram could pay back investors with company shares. However, a recent statement from a company spokesperson suggests this outcome would be unlikely.
• What does this mean for the future of SAFTs and token sales? How the Telegram case played out could have much wider ramifications within the crypto industry. In short, the SEC might find it easier to challenge other SAFTs in court, which has the potential to send shockwaves across all corners of the crypto ecosystem (e.g., exchange delistings, hefty fines for projects, etc.). Nic Carter put it more bluntly, saying that the demise of TON has slammed shut the window of opportunity for SAFTs and other token sales. All eyes are now on how the SEC approaches these other pre-launch projects that raised via the SAFT model, such as Filecoin (~$205 million) and Dfinity ($163 million).

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