Popular encrypted messaging app Telegram has recently announced it will cancel plans to issue digital coins in a public ICO after raising $1.7 Billion privately
Telegram is a cloud based instant messaging service that was founded by Russian exile Pavel Durov in 2013. The company has recently come under scrutiny from Crypto enthusiasts including Erik Voorhees. Voorhees had this to say about Telegram’s decision to bypass a public ICO;
The SEC has created an environment where only the rich (aka “accredited investors”) are able to get access to financial deals. The plebeians must stick to the lottery. Telegram Cancels public sale of tokens due to SEC: https://t.co/jHH4LgMvO5— Erik Voorhees (@ErikVoorhees) May 2, 2018
Aside from anger and disappointment there is also speculation that Telegram’s decision to avoid a public ICO has more to do with avoiding scrutiny than not needing to raise additional capital. According to Bloomberg, one reason for the company avoiding an ICO is that it allows them to avoid “unnecessary risks” according to Spencer Bogart a partner at Blockchain Capital.
The U.S Securities and Exchange Commission and other regulators have begun cracking down on tokens sold in ICO's. Regulators often view ICO's as securities because they believe investors buy coins for the sole purpose of selling them when their value goes up.
However, ICO’s are becoming a popular way for companies and organizations to raise capital through investments that often take place outside of regulatory bodies and financial institutions like banks. When a company seeks investment or capital it is often much harder for them to secure that funding than release coins or digital assets related to their organization.