From what was rumored to be the biggest initial coin offering (ICO) in history, Telegram has now shut down its much-publicized ICO, as reported by the Independent.
While some have claimed that Telegram already successfully raised its monetary target, it seems more likely that the cancellation was due to the tightening of ICO regulations happening across the world and particularly in the US.
ICOs have collectively raised USD 12 billion in funds since 2014, but perceived connections with scams and fraudulent activities have led the Securities and Exchange Commission (SEC) to scrutinize the legality of these fundraising efforts.
SEC chairman Jay Clayton recently testified before the US Congress, saying, “Many ICOs are being conducted illegally. Their promoters and other participants are not following our security laws.”
Satis Group created a resource to identify ICOs and cryptocurrencies as scams, but Telegram’s fundraising for the Telegram Open Network (TON) coin does not appear to fall into this category. Officials have argued, however, that this could not be accurately identified until the final launch that was scheduled for later this year.
In the white paper detailing the ICO held by Telegram, the company detailed its objective to create a cryptocurrency that could overcome the limitations of Bitcoin and the other leading cryptocurrencies. The digital currency was advertized to offer lower transaction fees at quicker transaction times.
The white paper reads: “To this day, no consensus-backed currency has been able to appeal to the mass market and reach mainstream adoption. Telegram will use its expertise in encrypted distributed data storage to create TON, a fast and inherently scalable multi-blockchain architecture.”
Investors and industry pundits have reacted angrily to the cancellation, which reportedly raised USD 1.7 billion. While this gives Telegram enough finances to launch TON, they have put the cryptocurrency on hold.
ShapeShift CEO Erik Voorhees is one such frustrated industry specialist who vented on Twitter.
The SEC has created an environment where only the rich (aka “accredited investors”) are able to get access to financial deals. The plebeians must stick to the lottery. Telegram Cancels public sale of tokens due to SEC: https://t.co/jHH4LgMvO5
— Erik Voorhees (@ErikVoorhees) May 2, 2018
Telegram has a long way to go to rebuilding a relationship with the investors. With its ICO promoted as bringing the world the first mainstream cryptocurrency, this is disappointing news for some in the cryptocurrency market.