The rise of the new TON ecosystem has caused a stir this year. Telegram has become the first messenger to integrate cryptocurrency, proving once again that its founder, Pavel Durov, is a master of groundbreaking technological innovations. Why is everyone talking about TON now, and what does the future hold for this system? Let's dive into our latest feature.
2018: The Dawn of TON
In 2017, Pavel Durov, the creator of the well-known social network Telegram, announced plans to develop a blockchain platform. Together with his brother Nikolai, he conceptualized the new project and, within a month, raised $1.7 billion through an initial coin offering (ICO) using Telegram. This massive ICO caused a buzz in the crypto community, attracting even those initially uninterested in TON.
The substantial funds raised from the ICO led the company to make a bold decision: the developers decided against a public token sale. The demand from investors exceeded the ICO supply, a rare occurrence in the crypto space.
2019: Approaching Launch and SEC Controversies
In early October 2019, Telegram announced that the TON network and Gram token would launch by the end of the month. While investors celebrated, SEC specialists were finalizing a lawsuit. Just a week later, the regulator sued Telegram Group Inc. and its subsidiary TON Issuer Inc. for the "illegal sale of unregistered securities."
"Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold," said Stephanie Avakian, co-director of the SEC's Enforcement Division.
Due to the legal proceedings, the TON launch was postponed to April 2020. Complicating matters, failing to launch the protocol by the end of October 2019 was considered a breach of contract, necessitating refunds to all investors. Fortunately, the issue was resolved amicably.
2020: Continued Launch Challenges
On March 24, 2020, the Southern District Court of New York issued a temporary ban on distributing GRAM tokens. This led to another delay in the protocol launch and the immediate need to refund $1.22 billion to investors. On June 10, 2020, Telegram's owners repaid the investors and paid an additional $18.5 million fine. The SEC had seemingly won, at least on the surface.
Why Was the SEC Against TON?
The U.S. Securities and Exchange Commission's opposition to ICOs is not new. The SEC has consistently argued that tokens sold in the U.S. should be classified as securities, subject to regulation, taxation, and oversight.
This stance was not well-received by cryptocurrency creators, who often fought against the strict regulations. The SEC maintained that any token sale in the U.S. violated federal securities laws and warranted sanctions.
The SEC explained that the GRAM token, as an alphanumeric cryptographic sequence, is not a security in itself. However, under the Howey Test, an investment contract – therefore a security – is defined as a contract, transaction, or scheme. The SEC pointed out that the scheme involving the sale and distribution of GRAM tokens needs to be evaluated according to the Howey Test criteria.
During this period, the entire crypto community feared a legal loss for Telegram. An SEC victory could mean stricter regulations for token launches and a re-evaluation of previously approved projects.
Late 2020 – Early 2021: Life After the Court Ruling
After the ruling banning the token launch, representatives of the TON Community Foundation made a surprising announcement. They claimed TON could be launched without Telegram, relying on the community's consensus.
The collective effort led to the launch of the New TON project, which had been successfully tested on Telegram's network before the legal disputes. Following the project's launch, the Open Network Foundation (TON Foundation) was established in Switzerland by key developers of the original network. On June 23, 2021, the TON Foundation founders published an open letter requesting the TON repository on GitHub and the ton.org domain, arguing that Telegram no longer needed them. Surprisingly, the request was granted, and New TON officially became the original TON.
2024: The Rise of TON and Telegram's Resounding Victory
Recent news about Telegram and TON reveals that the TON Foundation is thriving. Integrated into the innovative messenger, supported by investors, and attracting new entrants to the crypto space, TON is expanding its reach. It is safe to say that Pavel Durov and his team have achieved their goal, albeit not without challenges. Today, The Open Network (TON) is a secure, high-speed, scalable, and decentralized blockchain capable of processing millions of transactions per second.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Telegram Will Launch a Crypto Wallet and Exchange” and “How Crypto is Shaking Up the Film Industry”.
