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Not a Gram for the soul: the story of the failed cryptocurrency Durov



In January of this year, a message appeared on the official Telegram website about the freezing of the Gram cryptocurrency project, which Pavel Durov had been developing on the TON platform (Telegram Open Network) since 2017, and during that time the project managed to attract about $ 1.7 billion from partners. The Americans stuck a stick in the wheels of a new Durov project: the US Securities and Exchange Commission (SEC) considered that Gram tokens did not comply with national regulations, which almost certainly meant a ban on the placement of a new cryptocurrency, which was supposed to be launched back in October 2019 of the year.

However, it was extremely difficult for its developers to count on a positive court decision on Gram emission, given that shortly before that, in June 2019, Libra, Mark Zuckerberg's cryptocurrency from Facebook, failed miserably, and its release was blocked in the United States and in EU Therefore, at an early meeting on March 24 of this year, New York Judge Kevin Castel, who is leading the case, announced a predictable decision:

“The court believes that the SEC proved that in the Gram Purchase Agreements, Telegram’s obligations and agreements with the original purchasers (investors) imply the distribution of securities ... The court also considers that Gram tokens were received by the original purchasers who would resell them then to the public market, there is a certain risk in the form of public distribution of securities without registration. Therefore, it will be appropriate to issue a regulation prohibiting the receipt of Gram tokens by the original purchasers. ”

In a nutshell, the New York District Court upheld the findings of SEC experts and counted Gram tokens as securities with all the consequences. Thus, Telegram’s attempt to outwit American justice was unsuccessful. What did Pavel Durov try to do? To understand this, let's start a little from afar.

SAFT instead of ICO


A common ICO offer (Initial Coin Offering), used by thousands of blockchain projects, is an agreement on the initial placement of tokens (cryptocurrencies) on the network, and primary buyers (investors) are not among the owners of the company issuing cryptocurrencies, but may rely only on subsequent dividends if its value increases. However, over the several years of its existence, the ICO offer has completely compromised itself with numerous “junk tokens” that were issued only with the goal of welcoming customers, after which such “projects”, or more simply, financial pyramids, were curtailed.

In Telegram, instead of the SEC Securities Commission, which is not trustworthy, the offers decided to offer a new simplified SAFT agreement (Simple Agreement for Future Tokens). The main SAFT “trick” is that the project investors are not publicly disclosed, but at the same time “solid”, mainly corporate investors, are selected. In practice, such an agreement can give secondary buyers (read to ordinary people) only one guarantee: wealthy investors are investors, which means that the project should look serious in the eyes of the public. But the SEC experts and the American court did not convince, which is understandable: the creators of TON and Telegram have no actual obligations (in the form of the same registration of Gram as securities) to buyers.

About the goals of launching Gram


Of course, after the conclusions of the SEC and the announcement of the verdict of the American court, articles appeared that made the founder of Telegram almost a hero of modern times. In particular, they write that Gram is so technological that it will be able to bury traditional currencies, and supposedly this was what frightened the American authorities. It has also recently become clear that among the major investors in the blockchain project are companies belonging to Russian oligarchs Abramovich, Gutseriev and Abyzov, which could also affect the decision of the court.

But why not consider this project on a different plane: maybe all of the above motives attributed to the American law enforcement system are nothing more than idle speculation, and all that it did was cover up a major deal whose participants did not want to officially conduct it? The following fact leads to this idea. As soon as it became known about the court’s decision, Pavel Durov sent the investors an offer: either they get back 72% of the invested capital (the remaining money has already been spent on the development of the project), or 110% will be paid to them in a year. It is interesting that none of the investors was not only going to take back what was invested, but did not even make the slightest claim - Durov’s proposal was completely satisfactory to all, although investors could not understand the predictability of the decision of the New York District Court. All this suggests thatthat investors weren’t too concerned about whether the Gram issue would take place or not.

Note that the promotion of Gram goes in parallel with the promotion of a new type of “cryptocurrency cooperation”, that is, the SAFT offer. Not stupid people sit in the SEC, for whom it is obvious that SAFT in fact is the same ICO, and phrases that verified investors (initial buyers) can guarantee the reliability of the entire system can only convince naive people who, in order to get rich are ready to invest the latter in any blockchain system. In fact, SAFT is no different from ICO, since none of the agreements can guarantee investors the reliability of the next “Bitcoin pyramid”. Thus, the promoted SAFT looks like a possible cover for another real goal of Telegram developers - to find large investors directly for their messenger.

Last news


On May 4, Telegram shocked American companies that invested in the project, informing them that they would no longer be investors. Durov simply did not leave them any choice, offering to pick up 72% without any alternative that was offered to all other investors: 110% of the amount of investments in a year. We emphasize once again that none of the investors voluntarily withdrew the money, knowing full well that the American court would not give any kind of Gram emission in any form, which means that the purpose of the investments was completely different - investing in Telegram.

And in a recent interview with The Bell, unnamed investors said that, in connection with the last (May 6th) letter from Telegram, they practically did not hope to launch a blockchain project, and the project would most likely be “picked up by someone from the outside”.

In a letter dated May 6, the owners of Telegram notified those investors who were able to prove that they were not US citizens of the new conditions: now they are offered to issue investments in Gram as a loan at 52.77% per annum, that is, with the receipt of the very 110 % This once again confirms the conclusions that the launch of a cryptocurrency project was seen more as a possible bonus than as a main investment. By the way, the economists of Novaya Gazeta came to the same conclusions.

And on May 7, TON developers announced the launch of the Free TON blockchain platform. On GitHub, the source code of the main core TON OS modules was posted, which can now be used by those who want to release their cryptocurrency. The launch of new tokens called TON Crystal was also announced as a replacement for Gram. 85% of these tokens (a total of 5 billion are planned to be issued) will be distributed among platform investors, 10% will be received by developers, and the remaining 5% will be validators, that is, those who will process transactions in the system. TON Labs says that the launch of the blockchain platform is carried out independently of Pavel Durov and Telegram, and Gram investors are not related to the new project either. As TON Labs technical director Dmitry Goroshevsky stated in an interview with RBC, “the community cannot wait a year when, perhaps,Telegram’s TON core network will be launched, ”and Gram’s prospects are still vague.

What's next?


Dreams of online trading without limits do not leave the minds of freedom-loving citizens who are ready to seize on any such idea. However, with Libra from Facebook and Gram from Telegram did not work. In the first case, the SEC was really afraid of competition with real currencies (the audience of Facebook today is more than 2 billion users worldwide), which means the inevitable restructuring of the economy. In the case of Telegram, the principles for implementing the blockchain project do not correspond to the stated intentions.

As for TON Crystal, it’s still difficult to predict interest in this cryptocurrency, especially since it is launched in isolation from the 400-million-strong Telegram audience, which could provide solid support for new tokens. It is possible that such ideas are also visited by developers of other products that are focused on providing users with complete confidentiality (such as, for example, Signal, Threema or Wire instant messengers). The only question is whether one of them wants to use the new TON platform or whether he will develop his own software for the new cryptocurrency.

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