Telegram Withdraws Offer to Repay Investors With Gram Tokens

Telegram won’t be repaying its investors in gram tokens after all.

The messaging platform told investors in its TON blockchain project Monday it would not be paying investors back in tokens, and it was looking to buy American investors out immediately.

Telegram, which has twice delayed the launch of its new network, is contractually obligated to pay investors back 72% of their investments immediately after missing an April 30 launch deadline, but has offered to pay investors 110% of their investment if they wait a year for the network to go live as it grapples with the U.S. Securities and Exchange Commission (SEC) over whether its token sale violated federal securities law. 

The company currently hopes to launch in April 2021, pending the outcome of this case.

Just last week, Telegram left the door open to investors being repaid in grams, writing that if investors agreed to wait that year and leave their money with Telegram as a loan, they could get repaid in TON’s native tokens, dubbed grams “or another cryptocurrency,” according to the previous communication by Telegram. However, the crypto option has now been deemed infeasible. 

“Unfortunately, based on more recent discussions with relevant authorities and our counsel, we have made the difficult decision not to pursue an option involving grams or another cryptocurrency due to its uncertain reception from the relevant regulators,” said the letter, which was shared with CoinDesk.

The loan option is still there, the letter continues, but the payment will not be in crypto.

Telegram is only making the offer to its non-U.S. customers. American customers will be required to accept the 72% payouts, the letter said. 

“This offer is only being made available to offerees outside the United States who are not U.S. persons within the meaning of Regulation S under the U.S. Securities Act of 1933,” Telegram wrote.

The investors are asked to reply by 5:00 p.m. London time on Tuesday, May 5, 2020, to indicate whether they are located outside the United States.

“We intend to ask you to return signed documents in relation to this new transaction by Monday, May 11, 2020, so we need your initial response to this email as soon as possible,” the letter ends. 

According to Russian news publication The Bell, U.S. investors received a different version of the letter, explicitly saying they can only take back 72% of their investment.

Telegram did not address its intention to possibly sell equity to raise the funds it needs to repay investors in Monday’s letter. Spokesperson Remi Vaughn previously told CoinDesk investors in the TON project itself won’t receive equity as repayment, but that the company might raise cash through equity sales.

Telegram, which raised $1.7 billion in 2018 for its TON blockchain, has already delayed TON’s launch once due to regulatory concerns. The network was originally set to go live on Oct. 30, 2019, but was delayed to April 30, 2020, after the SEC sued Telegram on allegations of violating securities law last year. The latest delay comes after a judge upheld a preliminary injunction prohibiting the issuance of gram tokens.