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Telegram CEO backs TON Blockchain SpinOff Toncoin

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 CEO Pavel Durov has endorsed one of the competitive spin-off ventures for the first time since Telegram discontinued TON in 2020.

Telegram states that the TON blockchain is no longer extinct, but has revived as Toncoin, independent of the company that developed it.

On Thursday, Telegram CEO Pavel Durov posted a message on his official Telegram channel supporting the initiative.

“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 also provided a link to the Toncoin community group. According to data, the toncoin token price increased by around 30% as a result of the statement.

It was an unexpected action from the company, which has never previously commented on the projects that use its blockchain code, which was terminated in 2020 following a run-in with the US Securities and Exchange Commission. The endorsement appears to bring an end to an unofficial conflict between two groups that took over TON's open-source code and built their proof-of-stake blockchains: Free TON (recently rebranded as Everscale) and Toncoin. Their tokens are listed on several crypto exchanges.

Durov highlighted Toncoin's independence from Telegram, saying, “Unlike the original TON, Toncoin is independent of 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.”

However, some watchers believe the statement remains open the possibility of Telegram's engagement with Toncoin, which might violate the SEC's ban on the company releasing any crypto tokens until 2023, which was levied after the company resolved its legal case with the regulator.

Fedor Skuratov, a former community manager at TON Labs, the venture-backed company that assisted Telegram test the blockchain before leaving the project, said “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.”

Skuratov thinks Durov is seeking to show to the US regulator that his technology cannot be stopped. He “supported Toncoin and formally distanced himself from it at the same time.”

Selecting a winner

Due to the need to shut down TON, Telegram was left clambering for funds to reimburse investors who had paid in advance of obtaining tokens. The company sold bonds to collect $1 billion in February, marking its first-ever securities transaction.

Telegram is also planning an initial public offering (IPO) in 2023, according to the Russian newspaper Vedomosti, with a worth of $30 billion to $50 billion.

In 2018, Telegram began developing the TON blockchain, garnering $1.7 billion in two private fundraising rounds from Silicon Valley heavyweights household names, and also Russian billionaires and institutional investors from across the globe. After an eight-month battle with the Securities and Exchange Commission as to whether the project's token was a security, Telegram dropped the case and paid $18.5 million as fine, and announced it would no longer back the project.

Shortly after, TON Labs gathered a group of developers and expert validators to establish Free TON, a version of the blockchain. A second version, named Newton, was released in 2021 by a different group.

Anatoly Makosov, Newton's lead developer, went to ask Telegram to give control of the ton.org domain and the project's repository through a GitHub request, which Telegram accepted. The project was renamed TON and listed on several small-cap crypto exchanges soon afterwards.

Durov preferred Toncoin over Everscale because the Toncoin team“does not position itself as independent and ‘follows Telegram’s legacy’ without any leadership ambitions of their own, and Durov likes that.” according to Skuratov.

According to Skuratov, Everscale made an effort of terminating all links with Telegram to prevent a "toxic" association with the venture targeted by the US regulator.

Everscale is no longer connected to Telegram's project, even on technical basis, as per TON Labs CEO Alexander Filatov, and has shifted to another programming language.

“[The] former Free TON community a few months 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. “But we share the same original roots with Toncoin, so I want to wish them good luck.”

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