Trouble at Home
The Telegram Group has agreed to pay $18.5 million in civil fines and return $1.2 billion to investors. This decision came in a ruling from the United States Securities and Exchange Commission stemming from the sale of unregistered security tokens, or “Grams”. The Gram was intended to be used on Telegram’s Open Network (TON).
The objective of TON was to allow Telegram users to send cryptocurrency to each other similar to Facebook’s Libra project.
Pavel Durov, the CEO of Telegram, announced in May that the messaging app was halting development of its blockchain initiative.
“Telegram’s active involvement with TON is over . . . You may see – or may have already seen – sites using my name or the Telegram brand or the ‘TON’ abbreviation to promote their projects. Don’t trust them with your money or data.”
Telegram raised over $1.7 billion in its initial coin offering or ICO, in 2018. Initial interest in the ICO garnered widespread attention as the app is a popular communications platform in the cryptocurrency community. Strangely, the US court ruled that the sale of the Gram token could not be sold in the US or worldwide. Concerns were raised that Grams could find their way to secondary markets accessible to US residents. These tokens are now considered worthless but may find a few buyers who are interested in holding them as collectibles.
Russia is also taking a hard look at Telegram as reported by Coin Telegraph. “Several Russian entrepreneurs” claim that they purchased $11.7 million worth of Gram tokens that were discovered to be fraudulent. An unnamed British firm is being investigated for the illicit token sale according to the news agency Baza.io.
Only recently has Russia stopped trying to ban the use of Telegrams app within its borders, despite the CEO being a Russian citizen. On June 18th the messenger was allowed to operate unhindered.
With both the Gram and Libra facing an uphill regulatory battle, the path towards decentralized currencies continues. It is possible that these projects are being blocked due in part to governments developing their own Central Bank Digital Currencies (CBDCs).
On June 30th the US Senate Banking Committee listened to testimony from professor and researcher Charles Cascarilla, who spoke at length on the potential of a government-backed stablecoin.
Former CFTC Chairman Chris Giancarlo also testified as to the digital dollars potential as countries like China and Singapore are exploring similar alternative currencies. “The world is asking what role America will play in the future of money. The choice is we either take a leadership role or accept that others will lead and enshrine their values in money.”