Recent court filings reveal a treasure-trove of interesting details behind Telegram and its GRAM token that were previously obscure to the public. Here’s what we learned from the disclosure.
The SEC filed an emergency action halting the launch of Telegram’s blockchain, the Telegram Open Network, and the distribution of the protocol’s native token, GRAM. Telegram responded that the emergency action was an unnecessary, unfair case due to Telegram’s close cooperation and communication with the SEC over the last 18 months. The Court postponed the case until late February 2020.
From Humble Beginnings to Fantastic Heights
Telegram’s first beta version was launched in late 2013. It was capitalized by Pavel Durov and a private, Buffalo, NY based investor.
The SEC’s filing estimates Telegram Messenger’s userbase to be 300 million monthly active users. The last public statement from Telegram in early 2018 had Telegram at 200 million MAU.
A Ubiquitous Standard
The SEC filing cites the statistic that “84% of projects involving blockchain technology have an active community of Messenger users.”
This stat likely comes from the Telegram primer, which pulls this number from a small sample of just 200 projects on ICOBench from 2017. It’s unlikely that this number remains an accurate representation.
A Tight Team
The SEC filing quotes Telegram’s engineering headcount at 15 developers.
GRAM Purchasers: US vs. Global
Telegram raised a whopping $1.7 billion in their 2018 token sale (the second largest token sale ever, after Block.one), but the exact numbers and breakdown of US-based vs. global purchasers provides further insight.
The $1.7 billion was raised from 171 total purchasers, including $424.5M from 39 U.S.-based purchasers, and $1.28 billion from 132 non-U.S. based purchasers.
Notably, across both of the two phases of the sale, the minimum purchase quantity was $10 million worth of GRAM per purchaser (largely pricing out unaccredited and retail speculators).
Through the 2017-2018 ICO boom, almost every project hitting the ICO market was selling tokens in exchange for ETH or BTC.
The result: the treasuries of these projects dried up as the crypto market slid into recession. Companies who raised tens-of-millions of dollars in ETH or BTC and didn’t diversify into fiat currencies saw their spending power plummet.
To Telegram’s credit, and perhaps indicative of Telegram founder Pavel Durov’s foresight, Telegram rejected the trend of raising in ETH or BTC, and accepted only fiat currencies (dollars and euros) in exchange for GRAM tokens.
Thus, Telegram’s treasury didn’t lose any value as the crypto markets slid into recession through 2018. Their $1.7 billion in spending power remains $1.7 billion in spending power. Another point for Pavel and the Telegram team.
Assuming a moderate 4% interest rate, Telegram’s treasury yields a cool $68 million per year, $5.7 million per month, in interest alone!
Telegram estimated it would spend $520 million on messenger alone between 2019 and 2021. As of Jan. 31, 2019, Telegram had used approximately $218 million of the $1.7 billion raised to support the development of Messenger and the TON Blockchain.
Post-launch Telegram intended to distribute Grams in the following allocations:
- 500 million Grams as incentive payments to third-party developers of products for the TON Blockchain
- 100 million Grams for the Durovs
- 100 million Grams for other Telegram developers
- 1.4 billion Grams for other users by the TON Foundation — including distributing 250 million “free” Grams to Telegram users.
A Global Web of Entities and Key Players
After leaving Russia in self-imposed exile, Pavel and the Telegram team vowed to create Telegram as a privacy-focused communication network that would be free from the prying eyes of government surveillance.
As such, they’ve structured their entitles in a very opaque, distributed fashion, to remain obscure and to avoid jurisdictions and regulations wherever possible.
The primary players in the Telegram team are co-founders and brothers Pavel and Nikolai Durov. The younger Pavel Durov, CEO, is 35 year old, and is a citizen of Russia and St. Kitts and Nevis. The SEC action lists Pavel as 100% owner of Telegram Group Inc.
Pavel’s older brother Dr. Nikolai Durov, 39, is Telegram Group Inc.’s co-founder, co-owner, and CTO.
The primary entity owning Telegram Messenger, Telegram Group Inc., is a privately owned British Virgin Islands company, with its principal place of business in Dubai, United Arab Emirates, and the primary entity overseeing the GRAM token distribution, TON Issuer Inc., is a British Virgin Islands (BVI) company, wholly owned by Telegram Group Inc., with its primary place of business in Tortola.
TON Foundation is or will be incorporated as a Cayman Islands LLC. It’s mission is to “promote and support the TON Blockchain,” and includes management of Grams distributed to the TON Foundation by TON Issuer Inc. Pavel and Nikolai Durov will be and are the sole members of the TON Foundation’s board.
What Will Happen With Telegram?
There are some major open questions about the future of the Telegram Open Network – most of which will likely be answered in the February hearing vs. the SEC.
Despite these questions, Telegram remains a formidable entity, with strong leadership in the Durovs, a global userbase in the hundreds of millions, and a massive warchest in the billions. Given these facts, it’d be premature to bet against Telegram.
Guest post by Alan VanToai. The opinions expressed here are not the opinions of Crypto Briefing.
Alan is the co-founder of Telefuel.com — the Telegram client for crypto professionals, powers, and teams, trusted by teams at Ethereum Foundation, ConsenSys, Bitcoin.com, NEM Foundation, and others. With Telefuel, your Telegram messaging experience is faster, more organized, and more efficient thanks to Telefuel’s powerful features including chat folders, unread messages and mentions filters, chat type filters, keyboard shortcuts, and more. Get started for free at Telefuel.