Categories
Crypto

Telegram Cancels Its Public ICO To Avoid SEC’s Regulatory Inconveniences

On May 2, it was announced that the Telegram team has decided not to commence its public Initial Coin Offer (ICO) after gaining about $1.7 billion in its 2 private pre-sales fundraisings.

The news was released by The Wall Street Journal which cited a source linked to the ICO. According to the sources, after raising enough funds in the two private presales, Telegram’s administrators canceled the release of its public sales, in addition to the changes in the regulations of the public initial coin offering.

In these terms, you should note the reply of Erik Voorhees, CEO of ShapeShift, who criticized the effects of the SEC regulations on the cryptocurrency ecosystem, as it left small crypto investor in disadvantage.

The SEC has created an environment where only the rich (aka “accredited investors”) are able to get access to finance deals. The plebeians must stick to the lottery.

Erik Voorhees, CEO de ShapeShift

Telegram wants to avoid the recent regulatory inconveniences around the ICO

Despite that the tokens released via ICOs do not commonly represent shareholdings for the businesses which handle such projects, the SEC has still classified some of these crypto-related approaches as securities.

The Telegram ICO was designed to raise funds dedicated for the future release of the company’s own blockchain network, dubbed as TON (Telegram Open Network), which was announced as the Ethereum’s competitor and which was supposed to release the Telegram’s own cryptocurrency, GRAM.

From January to March 2018, Telegram managed 2 private presales of its ICO, in which it gained $1.7 billion, $850 million for each, from 175 private investors, a fact that made this ICO the one with highest collection rate, so far.

The Telegram private ICO was running under the Rule 506 of the Securities and Exchange Commission’s (SEC) Securities Regulation Act D, which stipulates that a business may manage and run a sale of securities not registered within the SEC, only if it keeps the sale for the accredited investors, send fundraisings reports back to the SEC, and investors are subject to a defined consolidation period.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Exit mobile version