Thread by @lawmaster

1/ In the wake of recent news that @Liquid_Global will be conducting a pre-sale of Telegram tokens, I thought I would spend some time to look into Telegram and TON, which is expected to go live on October 31.

Summary: I would think twice before considering to invest.

2/ Telegram was launched in 2013 by the Durov brothers, founders of the Russian Facebook competitor VK. The premise of Telegram was to protect users’ private conversations from government mass surveillance.

3/ Perhaps because of Telegram’s privacy-minded orientation and its perceived independence, it has become one of the most popular messaging apps.

- 200 million active users
- 70 billion messages daily

4/ Even though Telegram has tens of millions of user, it doesn’t have a business model because it believes “in fast and secure messaging that is also 100% free.” Prior to raising money via a private token offering, Telegram was funded exclusively by Pavel Durov.

5/ Its annual budget in 2017 was $70 million. The company says that if it were to run out of money, it would introduce non-essential paid options to support the infrastructure and finance developer salaries.

6/ The speculation of launching its own blockchain started H2 2017 in the midst of the ICO mania. In late 2017, Telegram said it planned to “revolutionize blockchain technology” by launching TON in 2018, which would be “fast, scalable and user-friendly.”

7/ Doesn’t this all sound oddly familiar? It should! Kik is currently being sued by the SEC, partly because it sold tokens to the U.S. investors out of concerns it would run out of funds during 2017.

8/ Telegram sold SAFTs in a Reg D token offering to accredited investors in two $850 million rounds raising a total of $1.7 billion from fewer than 200 private investors. Benchmark, Sequoia Capital and Kleiner Perkins were amongst the large VC firms that participated.

9/ Now, remember, Telegram sold a right to tokens released in the future — not equity. In comparison, Lyft raised nearly the same amount ($2.3 billion) in its initial public offering in March and its stock is currently trading at 33% below its IPO price.

10/ A large part of the appeal for VCs was that Telegram was planning to have a $1.15B public ICO in March 2018 but eventually ended up scrapping the plan in early May because of the unfavorable regulatory environment and having already raised enough from accredited investors.

11/ Telegram planned to spend $400 million on developing TON. Several months later, Telegram also said that it would refund investors’ money if TON doesn’t launch by October 2019 but that there “can be no assurance” of enough money left over to pay any such refunds.

12/ Sure enough, the network is now planned to be launched by October 31st — literally the last possible day so Telegram doesn’t have to return the money. Coincidence?

13/ Yesterday, Gram Asia, the largest holder of Gram tokens in Asia, announced it will be reselling a portion of its SAFT of Telegram’s tokens to the public on @Liquid_Global. US, Canada and Japan are blocked (amongst others).

14/ Liquid CEO Mike Kayamori said, “a public sale was always planned for the window between the testnet launch and mainnet launch. [Telegram] wanted to work with a regulated exchange to see how it goes before it gets listed [in full] in October.”

15/ A source close to Telegram disputed that statement, however, saying that “Liquid’s intention to sell encrypted messenger Telegram’s token is not connected to the company.” cointelegraph.com/news/sale-of-t…

16/ Giving Telegram $1.7 billion in exchange for tokens in the future was a really bad idea and I’m sure most of the VCs have already written off their investment. But pre-ordering tokens on a small exchange as a retail investor prior to TON even launching sounds downright crazy.

17/ It’s currently not even clear whether Gram Asia is authorized to resell their SAFT; what’s clear is that they are trying to exit their position. And many VCs that don’t have lockup periods will likely be doing the same as soon as the tokens hit exchanges.

18/ If you'd like to receive commentary/analysis like this on a daily basis, consider subscribing to Genesis theblockcrypto.com/genesis/