American TON investors will be only eligible for an immediate 72% repayment instead of a 110% refund option in April 2021, Russian news agency RBC reports on May 4.
Soon after missing the April 30 deadline to launch the Telegram Open Network (TON), Telegram sent another letter to its investors. In the new letter, Telegram reportedly said that American TON investors will not be able stay in the TON project for another 12 months.
Telegram had to retract the 110% option due to regulatory uncertainty in the U.S.
The news comes after Telegram offered to refund its investors on April 30. As reported, the firm proposed two options – an immediate 72% refund, or 110% in 12 months. The firm offered the second option as a “a token of gratitude” of trust in TON, promising to provide interested investors with a loan agreement shortly.
According to an investor letter seen by RBC, Telegram had to retract the second option for its American investors due to “uncertain stance by regulatory authorities in the United States.”
Court ruled against Telegram on March 24
Telegram has been struggling to sort out regulatory issues with the U.S. Securities and Exchange Commission (SEC) to launch the TON network and its native Gram (GRM) token since October 2019.
Having started the project in 2017, Telegram was preparing to launch the TON network in late 2019. However, the SEC deemed Telegram’s $1.7 billion initial coin offering illegal (ICO) arguing that the firm violated U.S. securities law by conducting the ICO.
In March, following a long-running legal dispute, the U.S. District Court for the Southern District of New York tentatively recognized that the SEC has a good chance of proving that Telegram’s GRAMs were unregistered securities. As a result, Telegram was prohibited from delivering Gram tokens to investors, at least until trial. Telegram CEO Pavel Durov subsequently offered a refund plan on April 30, apparently accepting the court ruling.
Soon after Telegram revealed the investor repayment plan, some major figures in the crypto community criticized the TON project. Mike Novogratz, CEO of crypto merchant bank, Galaxy Digital, and a major Bitcoin bull, argued that there is no need for either the TON or Gram on April 30. According to reports, the TON network can still be launched by independent validators regardless of the regulatory situation.
Telegram Will Release Code for Its TON Blockchain on Sept. 1
Telegram Open Network, or TON, the ambitious blockchain project announced last year by the Telegram messaging app, is expected to release the code needed to run a TON node on Sept. 1, according to two individuals familiar with the project.
One of these individuals is affiliated with TON Labs, a tech startup founded by Telegram’s token sale investors. An investor in the token sale also confirmed the date.
Telegram has maintained a high level of secrecy around TON, refusing to speak publicly on the project. TON Labs, which was founded to build developer tools for Telegram, has felt no such inhibition, becoming the only vocal tech company associated with the project. TON Labs has claimed to maintain regular communications with Telegram’s own developer team.
To date, there has been only one operational node – run by Telegram itself – on TON’s test network. With the upcoming code release, a broader range of users will be able to run their own nodes. Users can only run nodes on testnet, with a mainnet launch expected for Oct. 31, according to the purchase agreement for Telegram’s 2018 token sale.
Russian publication Vedomosty reported Wednesday that the release will contain code for the node itself as well as instructions for deploying a node.
Citing unnamed investors in the project, Vedomosty reported that interested developers will be able to use their nodes to test the protocol’s consensus and sharding mechanisms.
According to a leaked white paper, TON will use a Byzantine-fault-tolerant proof-of-stake consensus with “infinite sharding” and the capacity to support a staggering 292 shardchains (49 followed by 26 zeros).
Telegram raised at least $1.7 billion from investors based in Russia, the U.S. and several other nations in a 2018 token sale. If TON doesn’t launch by the end of October, Telegram will have to refund its investors, minus any expenses associated with its development.
Investors, Telegram users and the broader crypto community alike have remained interested in Telegram’s blockchain project. TON was previously expected to launch last December, before being significantly delayed. Many investors began selling the rights to their future tokens as a result, forming an unofficial secondary market for GRAM, the token associated with the network. However, this is technically a violation of Telegram’s investor agreement, which strictly prohibited secondary trades prior to launch.