Telegram Open Network

Telegram Open Network is a blockchain project created by the Telegram messenger team. TON was conceived as a decentralized system for exchanging data, creating decentralized applications and making payments between users using native coin $GRAM.

Telegram Open Network included: TON Storage — distributed file storage system; TON Proxy — decentralized VPN service; TON Services & DNS — domain name service; TON Payments — a platform for micropayments and P2P transactions.

Project development

Since its creation, Telegram has been developing with a focus on privacy and security of personal data. In 2017, the messenger reached the mark of 180 million users. Telegram Messenger team began to explore blockchain technology. At the time, there was no Layer 1 Blockchain capable of supporting Telegram’s large user base, so the team announced the development of its own Layer 1 Blockchain platform, Telegram Open Network.

The White Paper was written by Nikolai Durov, summarizing the problems of existing networks:

Inadequate speed and high network transaction costs for both Bitcoin (BTC) and Ethereum (ETH);
New users often can't figure out how to buy, where to store and how to transfer funds;
The market for goods and services where cryptocurrencies can be used for payment is limited;

Nikolai proposed a solution by describing the advantages of Telegram Open Network:

High transaction speed and scalability;
Intuitive interfaces for using decentralized applications and buying, sending and storing currency;
A large base of potential users of the new ecosystem;

In early 2018, Pavel and Nikolai Durov raised $1.7B by presenting Telegram Open Network to private investors.

Investors and several private organizations got the opportunity to use the new project as part of closed testing in April 2019.

On September 6, TON public test network was launched. Developers and community members had access to the browser, were able to study the structure of smart contracts, and were able to install and launch nodes. After the launch of the test network, TON Labs released a package of tools for working with TON blockchain. The platform code and its libraries also became available on official resource of TON.

In late September, the $GRAM wallet appeared in the alpha version of Telegram for iOS, and developers shared screenshots of the wallet online:

Screenshots of the wallet

«The Internet Copyright Association» filed a notice with the SEC to raise 2018 Telegram Group Inc. funds through a closed ICO and $GRAM token.

Based on the fact that investors purchased tokens and then resold them for the purpose of speculation, $GRAM was declared a security and the fundraiser was declared illegal. On October 12, 2019, the SEC filed a lawsuit against Telegram.

According to the agreement with investors, TON platform had to be fully operational by October 31, 2019, otherwise Telegram was obliged to return the invested funds. Due to the start of the lawsuit, the launch of the project was postponed, and most investors stated that they did not intend to demand a return of their investments in TON.

Telegram's lawsuit against SEC

In October 2019, the U.S. Securities and Exchange Commission (SEC) began inquiring about the project. The SEC stated that $GRAM was a security that had not been properly registered.

The SEC used information it received from U.S. investors to justify the conclusion that $GRAM was a security.

«The investor purchased $27.5 million worth of $GRAM tokens in early 2018 that would not apply at the time of launch, demonstrating an intent to capitalize on the potential increase in their value,» the SEC said.

SEC officials provided in court:

Durov’s correspondence with investors;
List of banks through which transactions were made;
List of investors.

Later, the SEC, with the help of the court, demanded a report on the distribution of Telegram’s proceeds, and investors had to justify the origin of the funds invested in the project.

Despite pressure from the regulator, the team refused to provide data on the ICO. Also, thanks to the efforts of lawyers, the court of the Southern District of New York rejected the SEC’s request to provide personal data of investors, citing that it violates the law on bank secrecy.

For several months, the SEC and Telegram have been engaged in litigation.

After the SEC's lawsuit against Telegram, the project's development was postponed for six months. In view of these events, Russian investors decided not to demand a refund due to the postponement of the project launch.

On January 7-8, 2020, Pavel Durov testified for 18 hours in the SEC's case against Telegram, in accordance with the court's decision.

After much litigation, Durov made a deal with the SEC, returned unused investor funds, and paid an $18.5M fine. TON failed to launch, Telegram's development team was disbanded, and the project was shut down. The open source code of the platform was left freely available.

On May 20, 2020, Pavel Durov in his Telegram channel commented — «Today is a sad day for us at Telegram. We are announcing the termination of our blockchain project».

Rebirth

Soon, enthusiasts began developing new blockchain platforms based on the source code:

On May 7, 2020, a 23-member community of initiators and validators launched the Free TON blockchain (now Everscale). The network was launched without an ICO or token sale. Everscale uses Threaded Solidity language (T-Sol) with support for dynamic sharding.

On May 29, 2020 the community of crypto-enthusiasts, developers, winners of public Telegram contests announced the launch of the project «NEWTON», preserving the original testnet2 network from Telegram. In May 2021, testnet2 was renamed mainnet. And NEWTON became known as TON Foundation. This is how the blockchain platform The Open Network began its development as we know it today.

Both projects strive for decentralization and scaling while maintaining the principles behind TON. They have helped preserve the unique developments and breathed new life into the ideas behind the Telegram Open Network.