The story of Telegram Open Network (TON) is one of bold ambition, rapid development, and ultimately, regulatory resistance. Conceived as a high-speed, scalable blockchain ecosystem integrated with one of the world’s most private messaging platforms, TON promised to revolutionize digital finance and decentralized applications. Yet, despite significant technical progress and over $1.7 billion raised from private investors, the project was officially terminated by Telegram in May 2020—just 891 days after its whitepaper debut.
This article explores the full lifecycle of TON, from its inception and funding to its technical milestones and ultimate downfall due to U.S. regulatory intervention.
The Birth of TON: A Vision for a Decentralized Future
On December 3, 2017, Telegram Open Network (TON) released a comprehensive 132-page whitepaper outlining an ambitious plan to build a next-generation blockchain platform. Designed to address scalability, speed, and usability issues plaguing existing networks like Ethereum, TON aimed to leverage Telegram's massive user base—then over 200 million—to create a seamless in-app economy powered by its native cryptocurrency, Gram.
Founded in 2013 by brothers Nikolai and Pavel Durov, Telegram had already established itself as a leader in secure, cloud-based messaging with end-to-end encryption via the MTProto protocol. With TON, the team sought to extend that ethos of privacy and freedom into the financial realm.
Private ICO: Raising $1.7 Billion in Secret
Unlike public token sales that opened to retail investors, TON conducted a private initial coin offering (ICO), structured in multiple rounds between January and March 2018. Participation was exclusive, with a minimum investment threshold of $1 million.
The first phase targeted select high-net-worth individuals, including Russian billionaires such as Roman Abramovich, Alexander Abramov, and other close associates of the Durov brothers. These early backers were granted preferential terms and access.
In the second phase, participation expanded slightly, though still limited to accredited investors. Despite the high barrier to entry, demand surged—Telegram raised $850 million in the first round** and another **$850 million in the second, totaling $1.7 billion, double the initial target. The overwhelming response led to the cancellation of the planned third round.
Although small investors couldn't participate directly, some pooled resources through investment syndicates to meet the minimum requirements—a testament to the market's confidence in Telegram’s vision.
Technical Progress: Building a High-Performance Blockchain
Behind the scenes, Telegram assembled a team of top-tier developers to bring TON to life. The network was built using a Proof-of-Stake (PoS) consensus mechanism and employed sharding technology—a method of splitting the blockchain into smaller, parallel chains—to achieve high throughput and low latency.
Key milestones included:
- September 2018: TON completed 70% of development. The Telegram Virtual Machine (TVM), functionally similar to Ethereum’s EVM, was nearly ready for smart contract deployment.
- February 2019: Development reached 90% completion. Internal testing showed transaction speeds far exceeding those of existing blockchains.
- May 2019: Telegram announced plans to launch TON in Q3 2019 and released a simplified stable version of the TON test client. Users could create wallets and deploy basic smart contracts.
- September 2019: A $400,000 programming competition was launched to encourage developer engagement on the platform.
- Late September 2019: An alpha version of the Telegram Wallet was released for iOS, supporting Gram transactions and wallet management.
At this stage, TON wasn’t just theoretical—it was functional, fast, and ready for real-world use.
Regulatory Roadblock: The SEC Steps In
Just weeks before the planned launch in October 2019, the U.S. Securities and Exchange Commission (SEC) intervened.
On October 12, 2019, the SEC filed an emergency action against Telegram, securing a temporary restraining order. The agency argued that Gram tokens were unregistered securities and that their distribution would violate federal law. The SEC feared that once Grams entered circulation, they would immediately flood U.S. markets despite being sold offshore.
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In response, most investors agreed to delay the network launch. On October 25, 2019, Telegram officially postponed TON’s rollout to April 30, 2020.
Over the following months, legal battles intensified. Telegram argued that Grams were not securities but functional utility tokens designed for use within a decentralized ecosystem. However, Judge Kevin Castel of the U.S. District Court for the Southern District of New York ruled against Telegram on April 1, 2020, stating that the company retained too much control over the initial distribution and could not prevent tokens from reaching U.S. investors.
This decision effectively blocked Gram’s release globally—even outside the U.S.
The End of TON: A Project Terminated
Despite having completed most technical work and secured substantial funding, Telegram could not overcome regulatory hurdles.
On April 30, 2020, Telegram offered investors two options:
- Receive 72% of their investment back immediately, or
- Loan the funds to Telegram until April 30, 2021, in exchange for 110% repayment.
Then, on May 7, 2020, an independent community of developers launched Free TON, a decentralized continuation of the original codebase—unaffiliated with Telegram.
Finally, on May 12, 2020, Pavel Durov announced in a public blog post:
“Today is a sad day for Telegram and us. We are announcing the termination of our blockchain project.”
He criticized U.S. regulatory overreach, noting that although most people live outside America, global innovation remains subject to decisions made by a small fraction of the population due to control over financial infrastructure and tech platforms like Apple and Google.
Core Keywords
- Telegram Open Network (TON)
- Gram token
- blockchain project
- SEC regulation
- private ICO
- Proof-of-Stake (PoS)
- decentralized applications (dApps)
- Free TON
Frequently Asked Questions
What was the purpose of the TON blockchain?
TON aimed to create a high-speed, scalable blockchain integrated with Telegram’s messaging app. It was designed to support smart contracts, decentralized apps (dApps), and fast microtransactions using its native Gram token—enabling a full digital economy within Telegram.
Why did the SEC stop TON?
The SEC classified Gram tokens as unregistered securities. It argued that Telegram conducted an illegal securities offering by selling future tokens to investors without proper registration, posing risks to U.S. financial markets even if sales occurred offshore.
Did investors get their money back?
Yes. Telegram offered investors 72% of their capital back immediately or the option to lend it to the company for one year at a 10% return (totaling 110%).
What happened to TON after Telegram shut it down?
After Telegram abandoned the project, a decentralized community launched Free TON, an independent blockchain based on the original open-source code. While technically similar, it operates without any affiliation with Telegram.
Could TON have succeeded if not for regulation?
Technically, yes. Independent tests showed TON outperformed many existing blockchains in speed and scalability. Had it launched without U.S. legal interference, it might have become a major player in Web3—especially given Telegram’s vast user base.
Is Telegram still involved in blockchain today?
While Telegram officially left the TON project behind, Pavel Durov has expressed interest in integrating cryptocurrency features into Telegram in other ways. As of now, no official blockchain initiative is underway under Telegram’s direct control.