Telegram provides a securely encrypted messaging platform and was planning on running an ICO to fund further expansion, in addition to the previously raised $1.7 billion. But these plans have been canceled, according to WSJ.
Increased scrutiny of ICOs
This comes as a number of governmental bodies have spoken of the illegal practices in the ICO domain. The CTFC, SEC, and others have stated their disapproval of ICOs not treating coins as securities, as other legal bodies are targetting pump-and-dump groups. US regulators have also expressed their aim to prevent ICOs from circumventing US law. These factors all likely played a part in Telegram’s decision not to run its ICO, in the same week the service was banned in Russia and Iran.
This also might have played into Telegram’s decision, with the company founder Pavel Durov saying the company was “not for sale” and a lawyer for Telegram denouncing the Kremlin’s ban, saying that:
“[the Russian authorities] have demonstrated again and again that the court system is devoted to serving the interests of the authorities. They no longer even care about basic external appearances.”
The company has raised two rounds of $850 million investment through private sales of its GRAM token, which will enable payments through the app. This is one of the reasons Iran claimed it was banning the platform, citing the ability of users to evade capital controls and move money out of the country.
While Telegram’s unique value proposition is the inability of governments to hack communications on the platform, there have been questions posed about the security of the platform. Nevertheless, the fact that its major competitors like Whatsapp are similarly thought to be compromised (Whatsapp being owned by Facebook, who are in the middle of their own user data privacy scandal) means that even terrorist groups like ISIS are said to use the platform for internal communication.
The canceling of the ICO stunts Telegram’s ambitions somewhat, who were initially reported to be targetting $5 billion in investment. Though they still have plenty of momentum and a billion dollar war chest to expand the platform.