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Crypto Wallet Launches Testnet Trades for 300million Telegram Users

Button wallet which happens to be a non-custodial and multi cryptocurrency provider has announced that it is launching a free testing service on the Telegram Open Network (TON) this would be in an effort to further drive the adoption of Cryptocurrency amongst 300 million telegram users.

6.6 testnet of gram tokens have been said to been offered through the client application as giveaways— the native currency of Telegram’s TON blockchain platform — this would be for users that activate its wallet, Forbes reported on Aug, 26.

Bringing in “a TON” of people

The Button Wallet’s co-founder and CEO, Alex Safonov said that the giveaway of the gram tokens is targeted at achieving mass adoption as this would encourage its users to have practical experience of transactions with digital assets with zero risks. He said :

“Cryptos’ biggest obstacle is mass adoption and what we’ve created will help people comfortable with trading cryptocurrency without using real money.”

Safonov also made an indirect reference to the “fanfare surrounding Facebook’s libra digital currency” — a crypto payments network that the social media giant intends to integrate into its widely used apps such as Messenger, WhatsApp, and Instagram.

There has also been anxiety around the apparent bug which has beset pro-democracy activists and Telegram users in Hong Kong, who reportedly fear that the issue could expose them to the Chinese authorities.

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Terrorist Groups Use Telegram for Raising Cryptocurrencies

Terrorist groups, including ISIS, Al-Qaeda, and Hamas, are using several social media platforms, including Telegram, to raise funds via cryptocurrencies.

The Jewish News Syndicate reported that the Washington-based Middle East Media Research Institute (MEMRI) provided evidence of the crypto fundraising via Telegram. MEMRI mentioned that Hamas’ military wing, Al-Qassam Brigades used Telegram, Facebook, and Twitter to ask for supporters to send funds via Bitcoin on January 29th.

Abdallah Al-Muhaysini, a Syria-based jihadi preacher, called out Muslims to support Hamas on Telegram by donating funds using Bitcoin.

The MEMRI team has also been in touch with the US and other western government agencies to brief them on their findings. Telegram’s CEO, Pavel Durov, has received letters from the US Congress to take immediate action against the evidence provided of terrorists using his platform.

Reported by the New York Times, Telegram stated that they could launch its native blockchain Telegram Open Network (TON) and its native crypto within the next two months.

Telegram Goes Public with Involvement in TON Blockchain

Telegram finally acknowledged its involvement in the Telegram Open Network (TON) and Gram. In Telegram’s terms of service on its official website, Telegram mentions the govern of use of the Grams Wallet as well as its involvement with the TON blockchain network.

The terms of service mentions:

“We have no control over the TON Blockchain network and, therefore, cannot ensure that any transaction details that you submit via the Services will be validated and confirmed on the TON Blockchain.”

Telegram stated under ‘use of services’ that it will not keep either personal information of its users nor their public and private keys:

“You are solely responsible for managing and maintaining the security of your Credentials. If you lose your Credentials, we do not have the ability to recover your Credentials or assist you in retrieving your Credentials, and you may not be able to access your Grams. Please note that we do not collect any personal information about you through your use of the Services.”

Although the messaging app has raised $1.7 billion in 2018 to develop the TON blockchain and its associated Gram token, this is the first time Telegram has publicly announced its involvement in TON. The company’s CEO, Pavel Durov, and other company representatives have never announced the project previously.

Earlier this month, Telegram informed investors that the blockchain network would launch in late October, adding that the testing state has been successful.

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Telegram May Push TON Launch Date Before Facing SEC

After coming under fire from the United States Securities Commission (SEC), Telegram has allegedly informed its investors that it will postpone launching its Telegram Open Network (TON).

According to Cointelegraph, on Oct. 16th Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

The change in plan comes following the SEC’s recent press release that declared that Telegram’s $1.7 billion dollar token offering was illegal and that emergency action and a restraining order had been filed against Telegram. The complaint further stated that the SEC considers tokens to be securities and the Securities Act of 1933 requires all securities to be registered with the SEC, which Telegram had failed to do. Telegram Violated Exemption

In February 2018, Telegram submitted a ‘Form D’ filing, which leverages the exemption 506(c) that allows securities to be sold with registration with the SEC as long as it is exclusively sold to accredited investors.

As the GRM Token assets could be resold by the accredited investors, the SEC interprets Telegram’s actions as a violation of the exemption. The SEC made their issue known in a public complaint which put forward the allegations of Telegram’s and Ton’s failure to register the GRM tokens as a security.

Telegram will respond to the SEC’s allegations in a hearing scheduled for Oct. 24. in New York.

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Telegram Investors Agree Not to Demand Money Back Until TON is Launched

The majority of investors of the Telegram Open Network (TON) in the $1.7 billion Gram token sale have voted against the return of their funds and agreed to postpone the launch of the blockchain network.

Last week, Telegram sent a message to its investors saying it wants to push the launch from the previously set late October 2019 to April 30, 2020.

On Oct. 23, Forbes Russia reported the news, quoting “two sources close to the Telegram team.” The report stated that by majority vote, investors refused to demand a return on the money invested in the project and agreed to wait until the blockchain platform is launched in April 2020.

The change in plan comes following SEC’s recent temporary restraining order against Telegram and TON under “certain emergency relief,” and permanent injunctions, disgorgement with prejudgment interest, and civil penalties.

The court hearing has been previously set in New York on Oct. 24; however, a hearing on the case has now been postponed until Feb. 18-19, 2020. A source close to Pavel Durov, the founder of Telegram, told Forbes that Telegram would announce the decision of the investors today.

Telegram representatives will seek a court decision on the argument that Gram is not a security at the court hearing and sent investors a letter stating that the postponement of the hearing was a positive development.

The letter read:

“The February hearings are different from the earlier scheduled for October 24, because at these hearings they should only consider the possible postponement of the launch of the platform. “We and our advisers will use the time to ensure that at the February hearing the position of Telegram is presented and supported as much as possible.”

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Telegram Resists the SEC Court Order to Reveal Financial Details of 2018 ICO

A recent court filing initiated by the United States Securities and Exchange Commission (SEC) compels Telegram to reveal bank records and other transactional documents showing how the raised funds have been used in the last two years.The filing stated: “Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case, Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”

In the early sale rounds in 2018, Telegram raised $1.7 billion for the development of its TON blockchain. It is worth noting that the company advised investors against participating in the rounds, yet many of them were able to access the tokens through external parties before the launch of Telegram’s blockchain.The SEC summoned the company to court for alleged claims that the tokens fell under the category of securities, which the company failed to make known to the regulators. As a result of this lawsuit, the company has equally been compelled to delay the release of its blockchain launch.

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Chelsea Football Club Owner Abramovich Confirmed as Investor in Telegram's 2018 ICO

The US Securities and Exchange Commission’s (SEC) investigation into Telegram’s $1.7 billion initial coin offering (ICO) in 2018 has revealed that some very big names took part in the unregistered offering.

According to a court document, one of the investors was Russian oligarch and Chelsea owner, Roman Abramovich who bought tokens (grams) via an offshore fund.

The Russian tycoon’s name, along with the amount he invested, was recorded in the document by Stephen Mckeon, a professor at the University of Oregon who was hired by Telegram to write a report on the Telegram Open Network (TON) project.

Abramovich appeared to get involved in the second round known as Stage A in March 2018. Telegram raised another $850 million on top of the same amount raised in the first round.

The SEC and Telegram

Although reports did surface in 2018 suggesting that Abramovich had invested in the first round, Telegram kept the names of the ICO investors secret, and the investors were additionally prohibited from talking publicly about their participation.

It was only when a court filing initiated by the United States Securities and Exchange Commission (SEC) compelled Telegram to reveal bank records and other transactional documents showing how the raised funds have been used in the last two years that the blockchain project.

The filing stated: “Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case, Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”

It was in the Telegram funded report by Mckeon, that the SEC discovered that the TON ICO received $10 million from Norma Investments Limited, a fund based in the British Virgin Islands which the regulator has identified as being controlled by Abramovich.

Abramovich is best known as the owner of Premier League contenders Chelsea Football Club and is alleged to have intimidated his former business partner into selling him the controlling share of their joint oil venture.

Ruling Before TON Mainnet Launch

This investment row between the United States SEC and Telegram is based on the premise that Telegram did not register their Gram tokens as securities.

The TON network was scheduled to go live and launch last October, but the SEC filed a lawsuit just prior tot he deadline. The suit was highly contested by Telegram who asked the US courts to overrule the regulator’s action, they were denied. After the months of exchanging legal papers, the sides met in court on Feb. 19.

The presiding judge has promised to rule on the case before the new deadline for the TON mainnet launch of April 30.

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Telegram Appeals Federal Court Injunction to Stop Gram Distribution

Telegram has filed an appeal to yesterday’s ruling by a United Stated federal court in favour of the US Securities and Exchange Commission (SEC) which has prohibited the issuance of Gram tokens for the time being.

Court Sides with SEC early

The SEC has won an important decision in their court case against Telegram over the legal status of the latter’s $1.7 billion Gram token offering in 2018. The SEC has maintained throughout that the tokens sold were unregistered securities and yesterday the US federal court granted the regulator an injuction to halt the distribution of Grams as the legal battle continues.

The injunction states, “For reasons that will be more fully explained, the Court finds that the SEC has shown a substantial likelihood of success in proving that Telegram’s present plan to distribute Grams is an offering of securities under the Howey test to which no exemption applies. The motion for a preliminary injunction will be granted.”

The SEC believes through its examination via the Howey test that the contracts governing the Telegram’s token issuance qualify Gram tokens as securities. Per the filing, ““Under the Howey test, the series of contracts and understandings centered on Grams are a security within the meaning of the Securities Act of 1933 (the “Securities Act”).”

Telegram immediately filed a notice of appeal with the Court of Appeals for the Second Circuit.

Former SEC Counsel Has Little Hope for Appeal

The evidence being presented to the court by the SEC’s Howey Test appears to have compelled them to act in favour of the regulator early in the legal proceedings – this cannot be a good sign for Telegram and their TON network.

On Feb. 18, Telegram’s lawyer, Alexander Drylewski had criticized the application of the SEC’s Howey Test, citing that a test designed to categorize securities does not apply to digital assets that are offered with a promise of managerial oversight, that will increase their value over time. The lawyer argued that when TON blockchain launches, Grams will not be securities but commodities.

Philip Moustakis, attorney at Seward & Kissel LLP and former SEC counsel told Blockchain.News that Telegram’s defense was not looking good and believes the SEC has applied the Howey test correctly.

Moustakis said,“Telegram argues the “interests in Grams” are one transaction and the “delivery of Grams,” another. However, the court, rightly in my view, held the Howey test requires it to examine the entire series of understandings, transactions, and undertakings at the time they were made, meaning the totality of the facts and circumstances underlying the economic reality of the investment, including at the moment in time when investors separated with their money.” He concluded, “In other words, an issuer cannot avoid application of the federal securities laws by separating in time the capital raise and the delivery of the digital representation of the investor’s interest in that capital raise. And, at delivery, in my view, the Grams would still represent the series of promises and understandings that led up to their distribution”

The case between the SEC and Telegram is ongoing and we will continue to bring you updates.

TON Developers Threaten to Go Rogue and Launch Network as Telegram Battles SEC Lawsuit

While the US Securities and Exchange Commission (SEC) may have temporarily succeeded in stopping the launch of Telegram’s TON network, can they really stop open-source technology?

On March 24, the SEC won an important decision in their court case against Telegram over the legal status of the latter’s $1.7 billion Gram token offering in 2018. The SEC has maintained throughout that the tokens sold were unregistered securities and on March 25 the US federal court granted the regulator an injuction to halt the distribution of Grams as the legal battle continues.

As the picture is starting to look very grim for the launch of the Telegram Open Network (TON), those in the TON Community Foundation are now discussing alternatives: notably their ability to launch with or without the messaging platform’s further participation and without regulator approval.

The Amicus Brief

The TON Community Foundation (TCF) is a non-profit association of TON ecosystem participants on a mission to enable the development of TON as a decentralized system through collaboration and cooperation.

The Foundation was formed amid the escalating legal tensions between the SEC and Telegram. On Feb 14, TCF filed an amicus brief which was in defense of the messaging giant.

The brief focused on the arguments made by Professor Maurice Herlihy of Brown University, in his report on TON for the United States Securities and Exchange Commission. Herlihy had concluded that the network was lacking critical components for a successful launch and was not secure. He also highlighted the lack of uses for the Gram token, from the report, “the TON public documents describe a suite of services that will eventually be purchasable by Gram holders. Today, however, few if any of these services exist.”

TCF insisted in the brief that the TON blockchain is fully operational, has “state-of-the-art prelaunch security” and a wide range of services on offer.

Arguing that the components Herlihy had criticized were not necessary, the Foundation stated that TON, in its current state, could be launched as a mainnet in a “matter of seconds.”

Will TCF Launch TON without Telegram?

Telegram has been fighting the SEC’s allegations that its 2018 token sale facilitated the sale of unregistered securities while fronting as a decentralized system, like bitcoin and ethereum since Oct 2019.

As the US Courts appear to be siding with regulators, granting a temporary halt on Gram distribution; the TON Community Foundation’s founder, Fedor Skuratov told Coindesk on March 25, that the community is seriously considering contingency options like launching the network without Telegram.

According to the article, Skuratov said “Strictly speaking, no additional measures are required to launch TON by the community, except for a consensus within the community. But in order to get recognized, we will need to come to an agreement with investors (at least, with a majority of them).”

Skuratov highlighted that all the code necessary to launch TON is available online as it was published as open-source by Telegram. He explained that they would merely need to create the genesis block and could run the network on a minimum of 13 validators.

Telegram Abandons TON and Gram Tokens, Durov Critical of US Regulating Whole World

Telegram CEO Pavel Durov has announced that they are calling it quits on the Telegram Open Network (TON) and its Gram tokens after a long-drawn-out battle with the United States Securities and Exchange Commission(SEC).

In a message on May 12, Durov said, “Today is a sad day for us here at Telegram. We are announcing the discontinuation of our blockchain project. Below is a summary of what it was and why we had to abandon it.”

America Believes it Regulates the World

The message by Durov linked to a long explanation by the CEO entitled, “What was TON and Why is it Over?” But in summary, Durov explained that the primary reason to abandon the project ultimately came down to the US regulators somehow being able to encroach on the sovereign rights of other nations and dictate where Grams could be distributed for the entire world.

Durov wrote, “Perhaps even more paradoxically, the US court declared that Grams couldn’t be distributed not only in the United States, but globally. Why? Because, it said, a US citizen might find some way of accessing the TON platform after it launched. So, to prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world – even if every other country on the planet seemed to be perfectly fine with TON.”

The Telegram CEO further reiterated that the US courts are exceeding its own jurisdiction and deciding what is best for the rest of the world and believes that they are exploiting their control over the dollar.

Durov stated, “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 (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world.”

The Story till Now

The decision comes after several months of legal battles between Telegram and the SEC.

Telegram, the online messaging app, had ambitious plans for its Telegram Open Network (TON) blockchain ever since the announcement in 2017.

The company had one of the biggest token sales in 2018, which was the catalyst for the ensuing and long legal battle. The SEC filed a class-action lawsuit against Telegram to shut down the TON network, stating that the Gram tokens were unregistered securities.

While Telegram argued that Grams were a commodity, the US District Court for The Southern District Of New York issued a ruling earlier this year siding with the SEC, preventing Telegram from issuing tokens.

Telegram filed an order of consent on May 8, agreeing to hand over to the regulator information concerning tokens distributed to initial investors, including the funds it collected from the first buyers of its 2018 ICO.

TON Network Launched by Developers

As the picture began to look very grim for the launch of the Telegram Open Network (TON), those in the TON Community Foundation noted their ability to launch with or without the Telegram’s further participation and without regulatory approval.

Shortly before Durov’s announcement, the developers launched the Free TON network on May 7. Durov was clear that Telegram would no longer be involved but he applauds the action of the developers.

Durov said, “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.”