Amid rumors that secure messaging app giant and cryptocurrency chat darling Telegram might halt its $1.2-billion initial coin offering (ICO) to avoid potential regulatory hassles, SEC filings show that it’s already raised $1.7 billion from private sales.
So does Telegram even need the ICO, and will they take this lucrative offering off the table because the potential pushback from the Securities and Exchange Commission (SEC) isn’t worth the trouble?
And if it does withdraw, should investors consider it a major setback?
Telegram already enjoys rank as the first-ever billion-dollar ICO and was set to head into its third month of money-raising, targeting another $850 million.
But rumors are now circulating that we may see a scrapping of the public offering, with media citing “sources with knowledge of the deal” to that effect.
The reasons for a potential scrapping of the public offering include regulatory uncertainty coming from the SEC and a mountain of paperwork.
According to Coingeek, SEC guidelines prohibit a company from selling securities to non-accredited investors for the most part, and Telegram would have to show that it’s complying with anti-money laundering regulations and KYC (know-your-customer) standards.
Telegram has a blockchain project called TON (Telegram Open Network), which at this point exists only on paper and is selling promises of tokens, or future “grams” as “Simple Agreement for Future Tokens”, or SAFT.
Put in another way: Telegram is selling securities, and this means it’s going to have to go through the SEC.
Speaking to CoinDesk, Morgan Creek Capital Blockchain partner Anthony Pompliano suggested that Telegram is trying to raise its capital goals in private sales “until there is less ambiguity in regulations”.
“The goal of fundraising is to gain access to capital to allow a team to build a product and company. It appears Telegram has already achieved their goal so there would be no reason to conduct a public sale,” Pompliano told CoinDesk. Related: Silicon Valley’s Billion Dollar IPOs
But no one knows for sure because Telegram’s been tight-lipped about the whole thing.
In the meantime, everyone’s wondering whether they’ll have to wait to get in on Telegram’s “grams” crypto tokens. But CoinDesk, citing a Russian investor, suggests there’s another way through a “secondary market for grams whereby small investors are buying the crypto tokens from whales that got into the private sales”.
But there are also suggestions that Telegram might also be unsure as to whether now is really the right time for a sale, regardless of the regulatory environment. With TON not even built yet, the original white paper might not be enough for more whales.
Sid Kalla of the Turing Advisory Group told CoinDesk that “the private sales were raised at around the top of the market euphoria. For a public valuation to reach back to those levels, the crypto community would need to see something concrete”.
Regardless, none of this was kept from potential investors. From the start, Telegram cautioned against a number of potential setbacks, from the regulatory environment to the fact that TON is not built yet.
But the whales want to know, and everyone seems to want a gram.
By Jan Bauer for Safehaven.com
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