CRYPTO NEWS AGREGATOR
Wed, May 27, 2020 11:00 AM by Sumit Bera

TON  Explained: What Was TON And Is It Really Over?

TON SEC struggle

One of the most striking phenomena of the crypto industry is the struggle of the SEC with the GRAM cryptocurrency and the TON blockchain network. There were tons of theories and forecasts built, and a great future was predicted for the project. But something went wrong, and the US authorities declared war on Durov's system.

In this review, we will figure out what was TON, what happened to it, why it happened, what are the chances to revive the project after its official   closure, and whether the new Free TON network has chances.

What was TON

The TON blockchain network project was officially presented at the beginning of 2018 by Pavel Durov, the mastermind of the famous VK social media and the Telegram encrypted messenger.

TON was developed on Bitcoin and Ethereum blockchain basis but was targeted to surpass them in flexibility and transaction speed. This network had its own cryptocurrency, which was called Gram. But TON and Gram lasted only 2.5 years.

Why did something go wrong with TON

The first alarm bell rang six months before the TON ICO — in July 2017. Then the SEC published the results of the investigation of the crypto project The DAO, which for the first time in SEC regulatory history called the cryptocurrency “securities”. It was a direct warning: all such ICOs in the USA would be prohibited.

On January 18, 2018, Durov announced that he intends to attract a billion US dollars with ICO. It was ICO that ultimately ruined the whole idea of ​​the project. But let's take it in order.  

At the preliminary stage of the ICO, it was phenomenally raised $ 850 million, while applications were submitted for $ 3.8 billion.

On September 10, 2019, Telegram developers started the testing of the TON. The archive with the source code was placed on a specially created site test.ton.org. In the future, this will help with the chance for the revival of the project in a slightly different form.

On October 11, 2019, the SEC filed a lawsuit in the US federal court against two Telegram companies. Official position: this ICO is an unregistered securities.            

On October 25, 2019, the NY Court ruled that Pavel Durov and two other Telegram employees, should stand trial and testify. Then it became clear that the TON project is unlikely to succeed. Meanwhile, Durov launched Gram testing service.

March 24, 2020, the NY Court agreed with SEC and recognized Gram tokens as unregistered securities.

May 12, 2020, Pavel Durov posted in his official Telegram channel the TON did not survive this war. In this letter, he emphasized the paradox of the US justice that decided the TON has no right to work not only in the USA but worldwide. Allegedly, because US people can get access to bypass the ban and get into TON. The main conclusion of the letter: almost the whole world depends on US decisions, which means that fighting with them is pointless.

At the same time, at the end of the letter, he officially distanced himself from any projects that operate or will operate under the TON or Telegram brand.         

What about the return of funds to investors and what they think about it

In his letter, Durov promised non-US-investors they would receive 110% of the funds invested in cryptocurrency even if Telegram repays the debt to them ahead of schedule. Some TON investors have already agreed to these conditions, but there are hardly a most of them.

Telegram proposed to convert investments into a loan at an annual 52.77%. After that those who will make this conversion can expect above mentioned 110% of their initial investments in 2021.

At the same time, Telegram offered only one option to American investors — to withdraw 72% of the initial investment.

Regarding investments, there is a prevailing mood of distrust amongst investors. Many of them don't believe that Telegram will issue any shares or tokens, or issue debt instruments, or return 110% of the investment. Investors are also worried that Telegram will have to pay the SEC lawsuit.

The head of Tokenbox, Vladimir Smerkis, said most participants in the TON ICO intend to sue the founder of the project.

Today, almost no one expects TON to officially revive, but many people look at alternative systems on the TON blockchain with interest. But at the same time, they do not particularly trust.

What is Free TON and what to expect further from TON

On May 7, 2020, an alternative version of TON called Free TON was launched. The declaration on the launch of Free TON at the time of the creation of this review was signed by more than 5.1 thousand companies and individuals. The Free TON Community is made up of TON developers and potential users. The participation of US citizens in the project is prohibited.

The most authoritative network members:

  • Ton labs
  • Certus.one
  • P2P.org
  • Kuna
  • Everstake
  • Chorus
  • Bitscale capital
  • Simplex
  • Ceo.io

Free TON members will receive tokens named TON Crystal (abbreviated as TON) without any charge. 5 billion tokens are generated in the system:

  • 85% goes for Free TON partners in the referral system;
  • 10% goes for developers;
  • 5% goes for potential network validators.

As Dmitry Goroshevsky (TON Labs CTO) and the founder of Kuna crypto exchange, Mikhail Chobanyan, say Free TON doesn't discuss TON trading, but technically such an opportunity is available.

In our previous review, we wrote that it is highly possible that Durov closes official TON, and some external (or not so external) organization like Free TON Community makes its TON with blackjack and... And here we are. And so it happened. No one, except Durov himself and some main persons of the Free TON Community, knows whether they have agreed on that. The community also actively denies any involvement in "old" TON.

A number of investors consider this project as a means to earn money, and not to support the blockchain development.

Another TON investor, EXANTE Executive Director Anatoly Knyazev, said that investors are not interested in TON technology without integration with 400 million Telegram users.

The community invited other messengers with their audience to cooperate. If this happens, it's possible to predict the certain success of the project.

Now any integration of Free TON with the Telegram messenger is impossible. But someday we'll probably see a possibility that there will be some ways to fully or partially integrate it without legal consequences. And then the project will be strengthened.

An important note: SEC can officially consider the start of Free TON an attempt by Pavel D. to circumvent a court decision prohibiting the first TON iteration. That could mean some new sanctions to the Telegram and Free TON both.

 Summary

TON was the open-source project, therefore, any number of networks can be started on its basis. It means Free TON may not be just one of many alternative TON clones. And in the shadow of them, perhaps, Pavel Durov will stand. You never know.

Stay in touch!

Subscribe to our weekеly newsletter!
Related:
Zoom