After two and a half years of work and a mountain of court documents, Telegram founder Pavel Durov announced Tuesday the end of his ambitious TON blockchain project. He admitted it was a defeat for his plans to revolutionize “how people store and exchange money and information” and blamed U.S. global hegemony for the setback.
- Durov’s problems with the U.S. authorities began when the Securities and Exchange Commission (SEC) launched a legal attempt to block the launch of cryptocurrency Gram, part of the TON project, arguing it was a form of security. Eventually, a U.S. court sided with the SEC, making an issuance extremely complicated. Durov has maintained throughout that Gram is not a security. “This court decision implies that other countries don’t have the sovereignty to decide what is good and what is bad for their own citizens. If the US suddenly decided to ban coffee and demanded coffee shops in Italy be closed because some American might go there – we doubt anyone would agree”, Durov wrote in a blog post announcing the end of TON. “Unfortunately, we — the 96 percent of the world’s population living elsewhere — are dependent on decision makers elected by the 4 percent living in the U.S.”.
- It’s not just Durov who is upset: investors poured $1.7 billion into the project. Some of Silicon Valley’s most famous funds were among those who committed money, including Kleiner, Perkins & Caufield and Sequoia Capital. Over the last two weeks, non-U.S. investors have received three letters from Durov with different offers of compensation: the most recent was for 110 percent back in a year’s time, or 72 percent immediately. U.S. investors will only get 72 percent of their money back.
- Investors who spoke to The Bell had different reactions. Some were prepared to wait for compensation, while others believe Durov will be unable to pay them in a year. There are even some who are considering lawsuits in an attempt to secure more compensation than what is currently on the table.
Why the world should care It’s possible that TON’s failure will be a body blow to investor belief in the bright future of cryptocurrencies. Either way, this is unlikely to be the end of the TON story, which looks set to keep rolling on even after the formal death of the project.