
A secondary market has emerged for buying and selling Telegram tokens early - dsr12
https://techcrunch.com/2018/05/03/telegrams-billion-dollar-ico-has-become-a-mess/
======
sschueller
Doesn't sound too bad to me. They raised $1.7 billion.

"Added to that, the fact that Telegram isn’t in control of the flow of capital
at this early stage doesn’t look good."

I don't understand that, why would they not have access to the capital which
they raised? Didn't they sell the tokens?

What a shit article, could at least provide some details.

~~~
lacker
Yeah the article describes this a bit confusingly. They do have access to the
capital they raised, they just don't have control over the subsequent flow of
capital in and out of these tokens. For example:

 _One source said an early investor who acquired a tranche of tokens at a
price of $0.37 is actively seeking to sell for $1.30 — potentially a 3.5-fold
increase for a token that hasn’t left the gate yet._

That sort of flipping (or "capital flow") isn't typically possible in startup
fundraising because investors are restricted from selling their stock.

For a normal startup it would look bad if your investors wanted to sell their
stock immediately because they would be signaling a lack of confidence in the
future. For this Telegram ICO, it isn't quite the same, but some people might
look at it as a bad sign in a similar way. To me, it is hard to tell what the
underlying basis for any valuation of this ICO is.

~~~
gowld
If investors sell at a loss, that shows a lack of confidence. Selling at a
gain means the investor thinks the stock is plateauing (not growing as quickly
as before), not necessarily bad if the stock already has a $billion valuation
and other investors are looking for a lower return (lower risk?) investment
than the the original investor.

An ICO is more like an IPO than a seed round, in terms of who buys in. And
early investors / insiders quite commonly sell fine stocks shortly after IPO.

None of this is a comment on the quality of Telegram in particular.

~~~
cwkoss
Could also mean that investors are covering cost, but still keeping part of
their position.

Ex buy at 0.30. Price goes to 1.2, sell 25% of holdings to cover cost, but let
profit ride.

As the saying goes, "Can't lose money by taking profits".

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luka-birsa
I can't put this in nicer words than what a shitty article.

\- Telegram might have opted to cancel the public sale due to recent events on
how SEC and CTFC perceive tokens (they are more and more viewed as security)
and in that case, it's better that all tokens are sold to professional
investors.

\- Just because there is a demand for TON tokens which will, in turn, create a
secondary "gray" market doesn't mean that the ICO is a mess. It's just that
they decided not to sell to the public.

\- You might love or hate what Telegram is doing with the ICO (I'm more on the
hate part of the spectrum _), but the fact remains - Telegram just raised 1.7B
without diluting and it seems that both Telegram and the speculative investors
are very happy about that. How that can be construed as a mess is beyond me.

_ Doing a "me-too" ICO with a bunch of buzzwords thrown in is such an obvious
money grab and I would prefer that they simply integrate Ethereum directly in
Telegram, but you can't deny their position as the go-to communication tool of
the Crypto community (Wechat being the second in line). They are just
capitalizing on their position and re-positioning themselves as a Wechat
clone, but built on crypto instead.

edit: formatting

~~~
gfody
> I would prefer that they simply integrate Ethereum

looks like TON is has its own proof-of-stake system, so it's competition for
Ethereum. is that why Russia is blasting it off the internet?

~~~
luka-birsa
It's more likely due to the fact that the Telegram founder is waging a war
with Russia and publicly denying them access to Telegram.

 _PS: I 'm still not convinced all of this is not some charade, but then again
I don't trust anybody that build communication tools, so do take the charade
comment with a grain of salt._

~~~
baby
They are publicly denying them access? Source? Beside a PR statement?

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rossdavidh
TIL raising $1.7Billion without even selling any stake in your company, is a
mess, and something to be avoided.

~~~
alex_young
Doesn't sound like a horrible thing for them. They have $1.7B they are now
unaccountable for right?

~~~
dumbfounder
Methinks Ross is speaking facetiously...

------
alex_young
Someone help me here. What do you get if you've 'invested' in this ICO? Some
kind of enforceable ownership in the company? Voting rights? Something else?

~~~
gringoDan
My favorite explanation of an ICO comes from Kevin Roose [1]

> _If you’re having trouble picturing it: Imagine that a friend is building a
> casino and asks you to invest. In exchange, you get chips that can be used
> at the casino’s tables once it’s finished. Now imagine that the value of the
> chips isn’t fixed, and will instead fluctuate depending on the popularity of
> the casino, the number of other gamblers and the regulatory environment for
> casinos. Oh, and instead of a friend, imagine it’s a stranger on the
> internet who might be using a fake name, who might not actually know how to
> build a casino, and whom you probably can’t sue for fraud if he steals your
> money and uses it to buy a Porsche instead. That’s an I.C.O._

[1]
[https://www.nytimes.com/2017/09/15/business/cryptocurrency-b...](https://www.nytimes.com/2017/09/15/business/cryptocurrency-
bubble-doge.html)

~~~
kolinko
The value of chips may not be fixed, but their amount is. And the more people
visit the casino the better.

As for the "stranger" part - "stranger" is just a friend you haven't gotten to
know yet! :D

------
Legogris
The only explanation model I have for this round is money laundering. Can
someone with more insight enlighten me on what would make someone seriously
invest in this with more than pocket change?

~~~
lacker
_One source said an early investor who acquired a tranche of tokens at a price
of $0.37 is actively seeking to sell for $1.30 — potentially a 3.5-fold
increase for a token that hasn’t left the gate yet._

People believing they can make a 3.5-fold increase is what makes them invest.

~~~
gowld
Naive question: Does "selling" a token generate cash, or some non-/semi-liquid
"money" sitting in a database of an unlicensed broker/exchange like a MtGOX?

~~~
nostrademons
On most of the exchanges that deal in ICOs, they're usually traded for other
cryptocurrencies like Bitcoin or Tether. These are "funny money" in the sense
that they're unbacked by any assets or hard currency, but are liquid in the
sense that you don't have any practical problem finding a buyer for them.
(This is changing rapidly, BTW, since Coinbase and other licensed crypto-to-
fiat exchanges have recently announced support for the ERC20 tokens that ICOs
typically use.)

In practice it's not much of a problem, because you sell your ICO tokens for
Bitcoin and then you sell your Bitcoin for dollars/yen/won/euros at a licensed
crypto-to-fiat exchange like Coinbase, Bitthumb, Gemini, etc. You do lose
anonymity because all the fiat exchanges have KYC identity-verification
procedures, but each step of the transaction is legal (for the ICO buyer), so
there's little risk.

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ChicagoBoy11
Doesn't sound like it has become a mess but rather just a huge windfall for a
lot of people and tons of capital raised by Telegram.

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omegbule
The guys running Telegram are a lot smarter than the whoever wrote this
article.

~~~
21
No shit. Taleb would say: "those who can, do. those who can't teach others or
write about others doing it". Just look at the financial press which is the
last place you should look for market analysis.

~~~
usrusr
Not really universal though: maybe some people who write about axe-murderers
would be really good at axe-murdering, but for some reason they never tried.
(At the opposite end of the spectrum you have professional sports and those
who write about it)

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cornholio
I think we are allowed to call a financial get-rich-quick scheme a "mess" only
after the Greater Fool™ game starts to run out of fools.

Here we seem to be in the full swing of the fool supply curve, the irrational
exuberance and speculative mania phase.

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matte_black
What happens if the SEC classifies this coin as a security?

~~~
Analemma_
Then Durov will be a fugitive in _two_ major countries. I wouldn't envy him
then.

As a general rule, if you're going to pick a fight with one superpower, try to
be like Snowden and make sure that you can still take refuge in a different
one. By contrast, Julian Assagne is what happens when you make enemies
everywhere.

------
jboles
ICOs in a nutshell:

[http://southpark.cc.com/clips/410872/erics-jewelry-
calvacade](http://southpark.cc.com/clips/410872/erics-jewelry-calvacade)

------
lostmsu
No joke. I'd like to see those people, who paid $1.7B for a promise of a
better messenger, and a PoS cryptocurrency, that is not decentralized (e.g.
like Ripple).

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paulie_a
It's an ICO therefore by definition it is a mess.

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skybrian
Could they run into the same problem Facebook ran into? If they have too many
private investors, they have to go public.

~~~
icebraining
This ICO is not an investment in the company. The buyers don't get any equity,
just the tokens.

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dang
Since people are complaining that the article is misleading, we changed the
title to more factual text from the article.

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Keeeeeeeks
Isn't this what happens when the company says "no public sale" after you've
already bought in?

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robinhood
Up to that point I was naive, thinking that Telegram would remain a simple
messaging platform without the ambition to either raise money or make money at
all - as it was the initial philosophy which attracted me to the platform in
the first place.

Now I'm concerned that it will become a bloated software. I hope M. Durov will
keep his vision of providing a simple messaging client that just work -
because we desperately need one.

~~~
mjburgess
So you expected volunteers to keep the service running?

~~~
robinhood
I didn't say that. They weren't volunteers - they are all employees, funded by
the billionaire who didn't want initially that American companies ruled the
messaging space.

~~~
AndrewKemendo
In this case you're suggesting the billionaire be the one who is the
volunteer. Or rather are you considering it a charity project funded by one
donor?

