Telegram Cancels ICO, After Raising $1.7bn In Private Placement
After raising a whopping $1.7 billion in the presale round, the much hyped public ICO of messenger application Telegram has been put off. This may be either to avoid SECs scrutiny or because it has raised enough money necessary for the project. It is certainly a blow to retail investors who had hoped to get a share on one of the largest cryptocurrency investment opportunities.
Reports indicate the capital has been raised from a small private group of less than 200 accredited investors. The amount was raised in two tranches of $850 million.
Telegram had earlier announced that it would use the funds for the development of Telegram Open Network or TON. Notably, the messenger platform aims to establish a public ledger which can eventually challenge Visa and Mastercard. Roughly $600 million will be used for implementing the necessary changes in the platform over a four-year period.
Another $500 million will be spent on equipments and the rest is planned to be spent on salaries and other expenses. Investors had earlier complained about the filtering process adopted for participating in the private sale and the cloudy terms mentioned in the token sale.
Telegram had plans to raise up to $5 billion. However, the increasing scrutiny of SEC may have forced the Telegram team to give a second thought about token sale. Telegram uses an encryption feature that ensures total privacy of messages. Several governments, including Russia and Iran, are concerned about this feature and want access to messages. Such requests have been turned down abruptly by Telegram in the past.
Telegram has more than 200 million users. It was founded in 2013 by Russian entrepreneur Pavel Durov and his brother Nikolai. Before creating Telegram, Durov founded Russian social network VK. So far this year, ICOs have generated $4.20 billion in funding. However, it has slowed down significantly in the recent months after SEC started tightening the noose of ICOs.