Telegram Cancels ICO After Multi-Billion-Dollar Private Sale
Popular messaging app Telegram has decided to cancel its public initial coin offering (ICO) after a highly successful pre-sale brought in $1.7 billion in proceeds.
No Need for a Public Coin Offering
The Wall Street Journal reported Wednesday that Telegram is calling off a planned sale of cryptocurrency to the general public. Citing a person familiar with the matter, WSJ said the company will utilize pre-sale funds to develop its new digital payment platform, the Telegram Open Network.
Fewer than 200 private investors took part in the pre-sale, which entailed purchasing a newly created digital currency in exchange for a stake in the new product. This is a clear sign that the sale was restricted to institutional investors and other high net-worth individuals.
Powered by blockchain technology, Telegram Open Network (TON) is being billed as the next “Visa/MasterCard alternative for a new decentralized economy,” the company said in a description of its plans, as reported by WSJ.
With 200 million users globally, Telegram has had no issue luring investors. By February, the company had already attracted $850 million in funding. At the time, Telegram was expected to generate more than $2.1 billion in total funding. Other reports indicated the company was planning to raise more than $5 billion through a combination of public and private sales.
Information on Telegram’s token sale has been extremely difficult to come by. As CCN reported Wednesday, potential investors have even struggled to convince Telegram to provide concrete details about the fundraiser and the planned allocation of the funds. At the time of writing, the company still hasn’t commented publicly on its token sale.
In January, Hacked reported that the TON token was expected to launch in the fourth quarter. At the time, it was believed that $620 million of the ICO proceeds would go toward development over a four-year cycle. Roughly $500 million of that total was expected to cover equipment costs while the remainder was allocated to salaries and fees.
Interestingly, Telegram had carved out a strong niche in the cryptocurrency community long before its interest in an ICO was first documented. Presence on Telegram is seen as a must-have for ICOs looking to build interest, trust and transparency in their project.
ICOs have generated nearly $4.2 billion in funding this year, though intake has slowed significantly over the past two months.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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