According to Telegram, its TON blockchain is not dead anymore but has returned to life as Toncoin, independently from the company that created it.
Telegram CEO Pavel Durov published a post in his official Telegram channel on Thursday that gave backing to the project.
“When Telegram said goodbye to TON last year, I expressed the hope that future generations of developers would one day carry on with our vision of a mass-market blockchain platform,” he wrote. “So I was inspired to see the champions of Telegram’s coding contests continue developing the open TON project, which they rebranded to Toncoin.” He included a link to the Toncoin community group. The statement prompted a nearly 30% spike in the toncoin token price, according to CoinMarketCap data.
It was a surprising move from the company, which has never before commented on the projects that use its blockchain code, abandoned after a run-in with the U.S. Securities and Exchange Commission in 2020. The endorsement seems to put an end to the informal rivalry between two teams who took over TON’s open-source code and launched separate proof-of-stake blockchains: Free TON (recently re-branded as Everscale) and Toncoin. Both of their tokens are listed on a number of crypto exchanges.
Durov emphasized the absence of a link between Toncoin and Telegram: “Unlike the original TON, Toncoin is independent from Telegram. But I wish its team the same success. Coupled with the right go-to-market strategy, they have all they need to build something epic.”
Still, some observers say the statement leaves open the question of Telegram’s involvement with Toncoin, potentially violating a ban from the SEC on launching any crypto tokens until 2023, which was imposed after the company settled its court case with the regulator.
“The key question here is, whether the U.S. justice system would be willing to dig into the connection [between Telegram and Toncoin] and whether Durov would have enough time and money for a new round of fighting,” said Fedor Skuratov, a former community manager at TON Labs, the venture-backed company that helped Telegram test the blockchain before it quit the project.
Durov might be trying to show the U.S. regulator that it couldn’t actually stop his technology, Skuratov said. He “supported Toncoin and formally distanced himself from it at the same time.”
Telegram did not respond CoinDesk’s request for comment by press time.
Choosing the winner
The obligation to shut TON left Telegram scrambling for money to repay investors who had paid upfront in advance of receiving tokens. This February, the company sold bonds to raise $1 billion, its first-ever securities sale. According to the Russian newspaper Vedomosti, Telegram is also preparing for an initial public offering (IPO) in 2023, aiming for a $30 billion to $50 billion valuation.
Telegram started working on the TON blockchain in 2018, raising $1.7 billion in two private funding rounds from Silicon Valley household names, as well as Russian billionaires and institutional investors around the world. However, after an eight-month fight with the SEC over whether the project’s token was a security, Telegram quit the case, paid a penalty of $18.5 million and said it would no longer support the project.
Soon after, a group of developers and professional validators led by TON Labs launched a version of the blockchain named Free TON. In 2021, another group launched a second version, calling it Newton.
Newton’s leading developer, Anatoly Makosov, asked Telegram though a request on GitHub to hand over the ownership of the ton.org domain and the project’s repository, to which Telegram agreed. Soon after that, the project took the name TON and was listed on a range of small-cap crypto exchanges.
As to why Durov chose to support Toncoin rather than Everscale, Skuratov said he believes that’s because Toncoin’s team “does not position itself as independent and ‘follows Telegram’s legacy’ without any leadership ambitions of their own, and Durov likes that.”
Everscale made a point of cutting all ties with Telegram to avoid a “toxic” association with the project targeted by the U.S. regulator, Skuratov said.
TON Labs CEO Alexander Filatov said Everscale isn’t connected to Telegram’s project anymore, even at a technical level, and has switched to a different programming language.
”[The] former Free TON community a few month ago consciously chose to move to the Rust implementation of the node/network (TON is on C++) and rebrand the ecosystem to Everscale,” Filatov told CoinDesk. “But we share the same original roots with Toncoin, so I want to wish them good luck.”
Makosov had not responded to CoinDesk’s request for comment by press time.