The future of the Telegram Open Network (TON) and GRAM tokens is now at stake, as the firm behind both appears to be throwing in the towel. Last week, Telegram formally withdrew an appeal against a United States injunction that restricted it from issuing and distributing the GRAM tokens.
The State Wins this One
According to court documents, Telegram confirmed that it would no longer be fighting the injunction against the tokens. The move appears to be an acknowledgment of defeat, and it could put the future of both projects in jeopardy.
The TON is perhaps the most significant part of Telegram’s foray into the crypto space. The company announced it in 2017, explaining that it would be a blockchain platform that helps to facilitate payments through the GRAM tokens. At the same time, it will help to host decentralized applications and improve their scalability levels.
However, the project soon drew attention from the Securities and Exchange Commission (SEC). This was thanks in no small part to two initial Coin offerings (ICOs) where Telegram raised $1.7 billion.
Telegram had done tireless work on both projects for two years, and it was ready to offer the GRAM tokens and launch the TON in October. However, the SEC swooped in and kiboshed the entire plan. The financial watchdog hit Telegram with a lawsuit, claiming that the company had sold unregistered securities in its ICO.
In March, a United States District Court granted an injunction against the London-based tech firm. The action immediately restricted Telegram from issuing its token, and it put the entire project on hold.
“For reasons that will be more fully explained, the Court finds that the SEC has shown a substantial likelihood of success in proving that Telegram’s present plan to distribute Grams is an offering of securities under the Howey test to which no exemption applies,” the court said in part.
Telegram Cuts Its Losses and Moves On
Telegram immediately filed an appeal with the Court of Appeals for the Second Circuit, but there were dim hopes that the filing will find an ear. It didn’t, and Telegram appears to be giving up on the project altogether.
Even more, Telegram chief executive Pavel Durov confirmed that the firm would be abandoning the two projects. In a message published on May 12, Durov confirmed that the injunction all put hit the nail in TON’s coffin.
“The US court declared that Grams couldn’t be distributed not only in the United States, but globally… It said a US citizen might find some way of accessing the TON platform after it launched. To prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world.”
He went on to criticize the SEC and the American government. In part, he accused them of overextending their power and working to prevent the launch of projects that base on decentralization.
Durov also pointed out that this could have more significant effects on the global crypto industry. As he explained, the world continues to look towards the United States in terms of science and technology. A lot of decisions remain contingent on America’s rulings, and if this happens, it could set a precedent for crypto projects in other countries.