The Wall Street Journal reported that Telegram has raised $1.7 billion in anticipation of an initial coin offering (ICO). However, the company has instead decided to scrap its much-publicized ICO in favor of beefing up its popular messaging service and expanding into tokenization via the Telegram Open Network (TON).
From ICO to Open Network: A Strategic Pivot
Paul Vigna details how Telegram has “brought in so much money from a small group of private investors that it is calling off a planned sale of cryptocurrency to the wider investing public.” After raising $1.7 billion from accredited investors in two private rounds, Telegram abandoned its ICO plans. The company had previously aimed to raise over $1 billion through a token sale for its “gram” token, but instead will use the capital to develop a blockchain-based digital payments platform.
“The network, which will be built using blockchain ledger technology, ‘can become a Visa/Mastercard alternative for a new decentralized economy,’ the company noted in a 23-page description of its plans,” Vigna wrote. Telegram’s founder Pavel Durov has often positioned the platform as a competitor to Bitcoin Core (BTC), arguing that Bitcoin’s chronic issues prevent mass adoption. Now, with nearly 250 million users, Telegram has a built-in market for its payment services.
Regulatory Headwinds and Russian Ban
The timing of the shift is notable. Telegram recently gained 200 million users but faced a Russian government order to provide user data and backdoor access for counterterrorism efforts. Durov refused, leading to a nationwide ban in Russia. This sparked protests, with supporters flying paper airplanes (Telegram’s logo) as a symbol of resistance. Additionally, Telegram’s European services experienced disruptions. These regulatory and operational challenges may have accelerated the decision to avoid a public ICO, which would have exposed the company to even more scrutiny. By sticking to private fundraising, Telegram maintains privacy and avoids bureaucratic oversight.
Telegram filed with the SEC in February disclosing $850 million raised from 81 investors, followed by another $850 million from 94 investors in March. All participants were accredited investors meeting income or net worth thresholds. The move away from ICOs also aligns with a global crackdown on token sales by regulators, making private placements a safer route. Telegram’s pivot to the Telegram Open Network could position it as a major player in decentralized finance, leveraging its massive user base to challenge established payment giants.