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Telegram has stated that its upcoming cryptocurrency, Grams, will not be integrated into its 300-million strong messaging app at time of launch. Instead, it will be released in a standalone app.
“At the time of the anticipated launch of the TON Blockchain, Telegram’s TON Wallet application is expected to be made available solely on a stand-alone basis and will not be integrated with the Telegram Messenger service,” Telegram said, in a statement. “In this regard, the TON Wallet is expected to compete with any other wallet applications designed and offered by third parties.”
Telegram added that it may integrate the TON wallet application with its core messaging app later down the line if it is legal to do so.
Telegram defies the SEC
In October, 2019, the SEC halted the release of the Telegram Open Network claiming it was an unregistered security offering—which Telegram disputes.
Telegram’s co-founder, Pavel Durov, is due to appear at a court hearing in New York tomorrow, where the SEC will grill him about TON. If the court rules that Grams are a security, Telegram may have to pay back the $1.7 billion to investors and abandon the project.
Telegram has repeatedly maintained that Grams do not constitute securities according to this test. Previous to today’s public notice, its lawyers have made the same claim in fiery letters to the SEC.
Today’s notice defended Grams, presenting many reasons why Telegram thinks they are not securities.
“You should NOT expect any profits based on your purchase or holding of Grams, and Telegram makes no promises that you will make any profits. Grams are intended to act as a medium of exchange between users in the TON ecosystem. Grams are NOT investment products and there should be NO expectation of future profit or gain from the purchase, sale or holding of Grams,” it wrote in the notice.
The comments appear to directly answer questions posed by the Howey Test, the decades-old framework the US Securities and Exchange Commission uses to determine whether an asset counts as a security. The Howey Test, determines an asset to be a security if "a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”
Last week, the SEC blamed Telegram for not handing over all financials related to the $1.7 billion it raised in its ICO.
Determined to go live
Despite the setbacks, Telegram remain committed to the project. Mitja Goroshevsky, the CTO and co-founder of TON Labs, an independent company that builds products for TON, told Decrypt in November that, whatever the SEC’s outcome, the network will go up in some shape or form—even if it doesn’t have Telegram’s name on it.
“Why would the SEC stop anyone from launching a network? What kind of argument would they have?” Goroshevsky said at the time. The SEC might be able to stop the token issuance of Grams, but it can’t stop anyone from using TON’s technology. Indeed, someone has already released a test wallet for it.
“The code for the TON Blockchain will always be open source and publicly viewable,” Telegram wrote today. That is, if it ever launches.