Secure messaging app Telegram has suspended a planned public sale of its cryptocurrency. This comes after it raised $1.7 billion in a private sale, raising money from less than 200 private investors.
Cryptocurrency and security fans alike were excited about Telegram’s public offering. The company’s intention is to use raised funds to build Telegram Open Network – a blockchain and payment network built into its messaging technology. The network’s aim is to be a “Visa/Mastercard alternative for a new decentralized economy”.
Telegram raised $1.7 billion between January and March this year, making it one of the largest initial coin offerings in the world. The numbers drew investor and enthusiast interest as well as interest from government regulators. Telegram’s success is important for startups as it shows a new and viable vehicle for fundraising.
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Telegram was founded in 2013 by brothers Nikolai and Pavel Durov. They had previously succeeded in founding Vkontakte – Russia’s largest social network and sold it to the Mail.ru group. The messaging service reached about 200 million monthly active users this year. End-to-end encryption security on the messaging platform has led to several disruption attempts by governments all around the world.
In 2017, the company announced plans to develop a platform based on blockchain technology, as well as launch a cryptocurrency called gram. The company believes that cryptocurrencies like Bitcoin have flaws which haven’t allowed it reach as much success as it should. Gram is set to fix those flaws and attract its users to cryptocurrency.
It is unsure what caused the company’s change of plans from announcing a public initial coin offering to keeping the coin offering private, and small. What is known is that Telegram is registered in the United States as an LLC and has informed the Securities and Exchange Commission about its private coin offering – open to only accredited individuals who met certain requirements. One of which was to have a net worth of at least $1 million.
Telegram’s cryptocurrency success or failure will serve as a signal for investors who are eyeing the market. It’s cryptocurrency, Gram, is one of several ambitious efforts to solve financial inclusion and bring cryptocurrencies to the mass market.