Encrypted messaging app Telegram canceled its widely hyped initial coin offering after drumming up $1.7B in investment, reports the Wall Street Journal.
The Russia-based startup initially planned to use their ICO money to fund a project called the Telegram Open Network (TON), which they claimed will usher in a 3rd generation of blockchain — but then changed their mind.
“This ICO’s over — everybody go home”
But why? Many crypto-creators split coin offerings into “presale” and “crowdsale.” Presales generate interest by raising a little money from private investors to keep the crypto-mining rigs on. Crowdsales are the main (public) event — the classic ICO party that everybody’s invited to.
For Telegram, which has 200m users, presale went better than expected. Way better. Interest in their platform (pegged to an actual service, unlike many cryptocurrencies) was so strong that they received more than $1.7B in less than a year — from just 175 investors.
No one expected Telegram to raise so much money…
Including the founders of Telegram. Before private investors blew their projections out of the water, the 2 Russian brothers/founders expected to make a humble 600m in presale and another 600m in crowdsale.
But after exceeding their total goal in presale, the brothers decided not to proceed with the public phase of the sale to avoid dealing with an ongoing SEC probe of ICOs that has been a thorn in the side of other cryptocurrencies.
Good news for presale buyers, tough luck for the rest of us
You might be wondering: “Can they do that?” The answer is: They can do anything they damn well please.
The Durov bros — who also created Russia’s largest ($3B) social media company before being ousted by oligarchs — are sitting on a pile of coin larger than the next biggest ICO (Filecoin’s $257m) by more than $1.4B.
As the rest of the world guesses what’s next for T-gram, presale buyers will be busy looking for ways to spend their coins — which instantaneously increased 3.5x in value after the ICO was canned.
Get the 5-minute roundup you’ll actually read in your inbox
Business and tech news in 5 minutes or less