The next entry in our series of ICO case studies is Telegram, the failed ICO that still managed to raise $1.7 billion.

What is Telegram?

Telegram is an instant messaging app with a heavy focus on security and privacy – all communications are heavily encrypted. It’s a very successful one too: it boasts some 200 million active users.

The cryptocurrency angle is less to do with Telegram itself than the TON: a blockchain-based platform that extends the core app into a whole host of features and services, including storage, payments, censorship-proof browsing, and decentralised apps hosted on the platform.

Before Telegram removed its ICO offering, $1.7 billion had already been raised – so it serves as another example of a failed ICO that actually kind of succeeded. Hooray?

Why did Telegram’s ICO fail?

The Russian government

Telegram refused to give the Russian security services its encryption keys. Russian telecommunications regulators promptly classified it an operator of information dissemination – which, as sinister as it sounds, is not incorrect as it is a messaging app and blocked it. Telegram then gave the Russian security services its encryption keys.

The crackdown and the climbdown both did their share of damage.

Shadow markets

With a popular messaging app and discounts available to early backers, a secondary shadow market for Telegram tokens emerged – and some sellers have already seen huge returns. A number of brokerages have also emerged, connecting buyers and sellers for assorted fees. Unofficial deals are a common occurrence (and even more so with the cancellation of the public sale).

Too much ambiguity

Pantera Capital’s Charles Noyes called Telegram “opportunistic” – describing its whitepaper as “a wishlist of things they want to have, and how it will work assuming that their wishlist doesn’t crash and burn.” MIT Technology Review called it “bold but short on ideas.”

Basically, nobody seems to know why Telegram is doing an ICO, or how it’s going to be successful. Not even Telegram.