Unsurprisingly, the Telegram blockchain and cryptocurrency project that is the Telegram Open Network (TON) looks set to be delayed after a stunning intervention from the SEC last week. TOM was gearing up for its launch before the SEC deemed its token sale to be illegal, setting a hearing for the end of October.
TON’s biggest issue is that, as a blockchain project funded by an ICO, it has pressure from its investors to launch and fulfill promises. What makes things even harder is that those investors were selected, and constitute a bevy of rich VCs and successful enterprises.
While TON is still reeling from the SEC intervention, they have started to try and do some damage control telling their investors that they will be pushing their deadline for launch towards April 30, 2020.
That leaves investors a seven-month nervy wait on TON to see if it will indeed launch, and in what frame it will launch. These same investors will no doubt be already losing their patience, having been assured that the project was regulatory sound.
However, the cut and thrust of the SEC’s issues were actually focused in on this institutionalized investors for although TON ICO’d to qualified investors, the SEC found that once launched, these investors could sell the GRAM tokens onto the public market, which would be in contradiction with the regulations.
In February of last year, Telegram submitted a Form D filing, which is used when a company sells a security without registering it with the SEC. Under this form, a firm is allowed to proceed with a securities offering without registering with the SEC should it offer it solely to qualified investors.
Essentially, because of the nature of these tokens, and the free market they could find themselves on, Telegram should have registered the tokens with the SEC, and as such, have made a rather large error.
The new deadline has only just been proposed by Telegram – this is according to a letter to investors – but the letter also calls on the investors to vote on the proposed deadline extension. As outlined in the agreement, Telegram states that moving the deadline requires the permission of holders of a majority of purchase amounts paid to Telegram regarding the Stage A purchase agreements.
The deadline in the purchase agreements from the pre-sale round can also be extended in the same manner.
Thus far, and on the surface of things, the investors in TON seem to be taking this major delay in their stride. However, what is bubbling under the surface is unclear. TON will be looking to ride out this SEC issue, but how long their investors keep patient is another matter altogether.