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TON Developers, Investors Back Telegram in SEC Fight

Undeterred by the U.S. Securities and Exchange Commission’s lawsuit against Telegram, developers and investors in the company’s blockchain project have formed a nonprofit for community governance.

One of the TON Community Foundation’s first actions was to defend Telegram in the case, filing a friend of the court brief Friday in the U.S. District Court of the Southern District of New York. 

The brief claims the “community has about 2,000 active participants,” and “the TON Blockchain is fully operational and could be launched on a 5-second notice.” The reason it hasn’t is because the SEC’s lawsuit against Telegram, brought in October, halted the launch of the blockchain, though not the project’s development. 

The brief takes aim at the expert report of Brown University professor Maurice Herlihy, earlier submitted by the SEC, which evaluated TON as lacking critical components for a successful launch and not sufficiently secure. The foundation argues that all the elements Herlihy found lacking in TON are not necessary for a launch.

The group was started by Fedor Skuratov, communications manager at TON Labs, the startup formed by TON investors building tools for developers. The foundation’s website went live Thursday night. 

The list of participants so far includes 22 people representing their companies, among them TON Labs itself, broker Da Vinci Capital, wallet apps Atomic Wallet and Button Wallet, local communities of investors and developers TON China and TON France, and a number of tech startups. Telegram itself is not listed. 

Since October, Telegram has been fighting the SEC’s allegation it had been selling unregistered securities and arguing it’s been building a decentralized system, like bitcoin and ethereum. 

The foundation will attempt to make this idea a reality, the group’s declaration says. “Our main mission is to enable the fastest and the most effective development of TON as a decentralized system through collaboration and cooperation.” 


The foundation, helmed by an elected Governing Council, will coordinate the developers, validators, stakers and other members of the community to promote the usage of TON via education, research and development, grants and lobbying, the declaration says. 

“I love this project but I always found it a bit centralized at this stage. So when I was given the opportunity to contribute in its decentralization, I was in!” said Philippe Rodriguez, head of the TON France community. 

Sergey Prilutsky, head of the tech startup MixBytes and one of the founding members, told CoinDesk his company had “many ideas” about how to use TON, which seemed “promising” as a blockchain. Therefore, MixBytes wants to have a say in how the future blockchain will be developed. 

“As developers, we need to know what standards, norms, security criteria, tools and documents will be adopted and take part in the decision making process,” Prilutsky said. 

“We’ve been in the ethereum community for a few years and we believe such associations are crucial at the early stages of such projects’ lives, which is the first ten years,” said Nick Kozlov, co-founder and CTO of Button Wallet. 

White paper scraps

To be clear, the foundation spearheaded by TON Labs has almost nothing to do with the TON Foundation described in the original TON white paper. 

In fact, the concept described in the white paper might never be created by Telegram as it was supposed to manage the supply of the native gram tokens. This became a dangerous area for the company as it’s trying to convince the court it’s building a decentralized system, and therefore its native token, gram, is not a security. 

According to the white paper, after the TON blockchain is launched and the investors get their allocations, every subsequent token should be sold by an entity named TON Reserve, which, in turn, would be controlled by the TON Foundation. 

The TON Foundation was also expected “to provide most of the validators during the first deployment phase of the TON Blockchain”, decide on protocol changes, and have a majority of votes during the first months of TON’s existence. 

“Later, when less than half of all grams remain under control of the TON Foundation, the system will become more democratic,” the white paper said.

The right moment

Then, apparently, the court battle made the need for “democratization” more urgent. 

In January, Telegram issued a “public notice” saying it was “under no obligation” to establish the TON Foundation. The notice also said the wallet for grams will not be built into Telegram’s flagship product, the popular messenger app, at least not at the moment of the launch. 

The wallet app for the testnet, which has been live since last March, was released in November. Earlier in February, Telegram published a technical paper describing the TON consensus protocol, dubbed Catchain.

Although nothing in the new foundation’s declaration mentions the SEC’s lawsuit, the community apparently wants to help TON progress even if Telegram’s hands are tied. 

Being more community driven will help the project succeed, said Sergey Vasylchuk, the CEO of tech startup Everstake, which is a validator in networks such as EOS and Tezos 

“We wouldn’t like to see this project [become] a lawyer’s hostage. We saw that happening to Block.One, which has a great team and implementation but its hands are tied by the legal issues,” Vasylchuk said.

Skuratov acknowledged the timing of the foundation’s launch was set by the court timeline. The first hearing on the case is scheduled for Feb. 19. 

But “the community has already reached the point when it’s time,” he said. 

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Telegram Finds Support From TON Community In SEC Battle

  • Telegram is being backed by its blockchain platform TON’s community in its heated battle against the United States Securities Commission (SEC).
  • TON Community Foundation has applied to defend Telegram in the court case.

Popular instant-messaging, Telegram is being backed by its blockchain platform TON’s community in their heated battle against the United States Securities Commission (SEC). The Telegram was accused of unregistered coin offerings in October 2019 by the SEC, and the court battle has been ongoing since then, delaying the deployment of the Telegram Open Network (TON) blockchain.

SEC Clampdown on Telegram

Telegram defended that the native token cryptocurrency used on the TON platform had no inherent value and hence could not be considered as a security. Still, the SEC denied the claims and charged Telegram fraud, alleging that the company additionally did not provide enough information to their investors about their “business operations, financial conditions, risk factors, and management required by securities laws.” 

The initial charges were put up against Telegram a few days before the release of TON, and the release was delayed to April 2020. Even though the network didn’t launch, development was not halted, and further improvements continued being written into the platform. Now, the community developers and the investors behind TON have stepped up and formed a non-profit foundation for funding and decentralized governance of the platform.

TON to the rescue Against SEC

The non-profit, TON Community Foundation has applied to defend Telegram in the court case. The SEC submitted expert-prepared reports claiming that the TON blockchain lacked important security features and wasn’t ready for release. The TON Community foundation shot back, claiming that the stated features weren’t necessary for launch and that the community already has over 2,000 active participants and was ready for an operational launch within a 5-second notice. 

The TON Community Foundation is lead by TON Labs communications manager, Fedor Skuratov. The Foundation’s primary goal is to quickly build up TON into being a fully operational decentralized ecosystem like Ethereum using community support.

Success at proving that TON is simply a decentralized platform will also help Telegram in court to prove that there is no security value to the Gram token being distributed on TON.

The Foundation itself also follows decentralized governance where a lead Governing Council will co-ordinate developers, investors, nodes, stakers, and other members of the community to help promote TON in the fields of education, research, and development. 

Telegram’s lock-up in the court proceedings prevents TON from integrating fully with the Telegram app until the case is resolved. Still, the community is very determined to push Telegram Open Networkinto deployment, and that is exactly what the Foundation hopes to achieve. 

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Telegram clears rumors about TON blockchain and Grams

Telegram, in an announcement, cleared rumors and speculations around its blockchain project TON and its upcoming cryptocurrency Gram.

The encrypted messaging giant, Telegram, published a blog post saying that they hope Gram will become a true compliment to traditional currencies, improving the speed, efficiency, and security of everyday commercial transactions globally. Telegram also warned that nobody can buy or sell Gram yet as they have not officially launched the cryptocurrency.

TON will be decentralized and maintained by third parties

Telegram, in its blog post, wrote that Telegram and its affiliates have not made any promises or commitments to develop any applications or features for the TON blockchain. The company further wrote that they hope that the decentralized community of third-party developers and others will contribute to the TON ecosystem through the development of applications and smart contracts. 

Telegram’s token won’t help you get rich. 

The company further clarified that people should not expect any profits based on the purchase or holding of Grams. Grams are intended to serve as a medium of exchange between users in the TON ecosystem, and no one should expect any profits from the purchase, sale, or holding of Telegram’s cryptocurrency. The messaging giant also warned about the risk factors that involve holding or buying a cryptocurrency. The post reads, “Users should fully aware of the risk that Grams may decrease in value over time or even lose all monetary value.” Currently, the company is facing a legal battle against the SEC. 

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Liquid Exchange Cancels Sale of Telegram’s Gram Tokens

Japan-based Liquid exchange has cancelled its sale of Telegram’s not-yet-launched gram tokens.

Originally announced last June, the limited sale of tokens sourced from Gram Asia – said to be one of the biggest investors in Telegram’s $1.7 billion ICO – took place in July.

However, the tokens were not to be released until Telegram’s TON network – the blockchain supporting the tokens – had gone live. That had been expected by the end of October last year.

Sale proceeds were held in escrow pending the issuance.

Now Liquid says in a blog post dated Jan. 10, that its sale terms specified that TON must have launched by Nov. 30, 2019, and, since that was not the case, the sale had to be cancelled.

Telegram’s blockchain project has been held up by a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) in October claiming that grams are in fact an unregistered security and ordering the company to halt the launch of the TON network.

The SEC is set to meet Telegram in court on Feb 18-19, as per recent filings.

Seth Melamed, Liquid’s head of business development, told CoinDesk: “100% of client funds were returned to participants. No fees or charges.” The escrow wallet made public by Liquid is now empty.

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