Messaging service Telegram said on Tuesday it is abandoning its blockchain platform Telegram Open Network (TON) after a lengthy battle with the U.S. Securities and Exchange Commission (SEC).
“Today is a sad day for us here at Telegram. We are announcing the discontinuation of our blockchain project,” wrote Pavel Durov, the founder and chief executive of Telegram, on his channel.
A U.S. court made it impossible for the messaging service, used by more than 400 million users, to continue development of Telegram Open Network, he wrote in a blog post.
“How? Imagine that several people put their money together to build a gold mine – and to later split the gold that comes out of it,” he wrote.
“Then a judge comes and says: ‘These people invested in the gold mine because they were looking for profits. And they didn’t want that gold for themselves, they wanted to sell it to other people. Because of this, they are not allowed to get the gold.’”
“If this doesn’t make sense to you, you are not alone – but this is exactly what happened with TON (the mine) and Grams (the gold). A judge used this reasoning to rule that people should not be allowed to buy or sell Grams like they can buy or sell Bitcoins,” he added.
Today’s announcement comes as a surprise, as just last month Telegram had assured people that it would launch TON by April 2021 and offered investors a refund of $1.2 billion, a significant part of their investment, or 110% in a year after the supposed launch of TON.
Durov noted today that the U.S. court declared that Grams could not be distributed even outside of the United States, as U.S. citizens would have found workarounds to access the TON platform.
“Sadly, the US judge is right about one thing: we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology,” he added.
In late March, U.S. District Judge Kevin Castel of Manhattan issued a preliminary injunction in favor of the suit by the Securities and Exchange Commission to bar the launch of TON blockchain platform.
Telegram first floated the idea of TON blockchain and its cryptocurrency to investors in 2017. Benchmark and Lightspeed Capital, as well as several Russian investors, put up $1.7 billion in exchange for the promise of future Grams.
“I want to conclude this post by wishing luck to all those striving for decentralization, balance and equality in the world. You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed,” wrote Durov, cautioning people to stay away from independent versions of TON built by third-party entities.
“So be careful, and don’t let anyone mislead you.”