Telegram announces that the messaging service will not hold a public initial coin offering for its upcoming blockchain platform. This decision comes off the heels of two record-breaking private fundraising rounds for the ”Telegram Open Network”, and Telegram argues that the vast amount of funds already raised is enough to successfully support the development of the platform. Moreover, this comes following a highly publicized ban of the Telegram service in Russia and a more recent one in Iran.
The news that the London-based messaging service has called off their public ICO will certainly come as a disappointment to those private individuals looking to invest. The ICO has already garnered a significant amount of attention, as two private funding rounds have been conducted in January and March of this year, raising $850 million each. However, the $1.7 billion raised was only sourced from investors with a net worth of at least $1 million or an income of $200,000 – in other words, hardly open to the public.
Nonetheless, the plan had previously been to conduct a public ICO as well. Telegram was reportedly initially considering raising as much as $5 billion through a combination of private and public ICO funding rounds. This notwithstanding, sources at the Wall Street Journal are now reporting that the public ICO has been shelved. The reasoning behind this is twofold – on the one hand, it would appear that Telegram does not want to jump through the regulatory and operational hoops required to provide an open ICO. On the other hand, Telegram is also reportedly satisfied with raising the $1.7 billion.
This comes following a recent crackdown on ICOs by the US Securities and Exchange Commission, which has put initial coin offerings under increased scrutiny. It also follows two separate bans of the Telegram service, which has a global user base of around 200 million users. It was first blocked by a Russian court over a refusal to hand over encryption keys to the Russian FSB secret service. Telegram was then also banned in Iran this past week, following a dubious Iranian report of the app facilitating the growth of ”widespread unrest” in the country.
The Telegram Open Network is intended to become a blockchain-based payment platform. This platform is supposedly intended to take the fight to payment giants Mastercard and Visa in providing the first reliable, decentralized internet compatible payment option. Furthermore, the fact that Telegram is hesitant to raise more funds through a public ICO hints that the company has got a fundamental understanding of the requirements connected to the network’s development.
Moreover, it shows that Telegram is not only raising funds for the sake of raising funds – rather, it implied that the firm has a clear plan and economic runway for bringing the Telegram Open Network to market. Nonetheless, this comes as a cold comfort for those among the general public who were looking forward to a public Telegram ICO.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.