Pavel Durov built Telegram in the early 2010s to protect users from oppressive regimes. Born in the Soviet Union in 1984, he was keenly aware of how authoritarian governments could tap into communication to control entire populations. Telegram’s end-to-end encryption and self-destructing messages offered a refuge for dissidents and protesters.
In 2018, Telegram released a whitepaper for a Layer 1 blockchain called the Telegram Open Network, enabling decentralized storage, payments, and other services. The initial coin offering raised $1.7 billion, making it the second biggest after the $4 billion EOS offering. However, the project soon ran into trouble with regulators and shut down by 2020.
Telegram open-sourced the project, and a community of developers picked up where the messaging app had left off. Anatoliy Makosov refined and launched the current network, The Open Network (TON), and its cryptocurrency, $TON. He then handed control over to the TON Foundation, which runs the project to this day.
In this article, we’ll look at TON, its native token $TON, how to invest in the $13 billion ecosystem, and some potential tax and regulatory risks.
A Brief Primer
The TON network powers decentralized applications on Telegram. For instance, the wallet features commission-free crypto transfers between Telegram users, making it the most common way to interact with Telegram Mini apps. Other services range from the TON Proxy (a decentralized VPN) to TON Storage (a decentralized storage service).
Under the surface, the network combines a proof-of-stake consensus mechanism with sharding capabilities to process upwards of 50,000 transactions per second. The network’s token, $TON, has a maximum supply of five billion tokens, with validators receiving rewards for maintaining the network and a built-in inflation rate of 0.6%.
$TON token holders can also influence how the network evolves thanks to the TON Foundation’s decentralized autonomous organization (DAO) protocols. Those holding the blockchain’s native token can cast votes on any proposed changes to the blockchain or ecosystem, helping to influence its future direction.
TON’s roadmap includes numerous initiatives that could bolster adoption, including a browser, gas-less transactions, and a stablecoin toolkit. Source: TON
Looking ahead, we see TON’s roadmap includes creating a browser, developing a stablecoin, and implementing various other unique features on its blockchain. The TON Payments network also aims to introduce channels between participants, enabling unlimited instant micropayments without fees, while TON Storage is readying version 1.0.
How to Invest in TON
The easiest way to purchase $TON is using a centralized exchange, like Coinbase, Binance, or Kraken. However, you can also purchase the token on decentralized exchanges (DEXs) like PancakeSwap by connecting their wallet and making a trade. And, of course, you can use Telegram’s @wallet bot to purchase $TON within Telegram.
Of course, the bigger question is whether $TON is a good investment. Given Telegram’s regulatory challenges, the SEC could target $TON for conducting an unregistered securities offering, as it has done with countless other crypto projects. And $TON’s high-profile nature makes these kinds of enforcement actions arguably more likely to occur.
Telegram—$TON’s primary market—is also facing its own legal jeopardy. In August 2024, Durov was arrested in France and charged with facilitating crimes ranging from drug trafficking to child abuse. And despite shutting down the Islamic State (ISIS) on the app, it continues to be widely used by other terrorist organizations and unsavory users.
TON prices began with a sharp rise in 2022 before exploding in popularity in 2024 amid growing interest among Telegram users. Source: CoinMarketCap
That said, $TON has also become a resounding success story. Since early 2024, the token soared from around $2.00 to more than $8.00 before settling around $5.00 in recent weeks, yielding a $13.3 billion market capitalization. Meanwhile, the community sentiment remains very bullish, according to CoinMarketCap’s measure, after the involvement of crypto whales.
According to IntoTheBlock, TON’s largest holders’ net inflows soared by about 50% in recent weeks to help stabilize the token’s price following a collapse from its highs. These whales acquired about 13.8 million tokens on October 16th alone, worth over $72 million. The token’s holding time has also steadily increased, suggesting investors are holding for longer.
Regulatory & Tax Concerns
The SEC settled with Telegram in June 2020 following accusations of running an unregistered securities offering in violation of federal securities laws. At the time, Telegram agreed to return more than $1.2 billion to investors and pay an additional $18.5 million civil penalty (and agreed to give notice before participating in future digital offerings).
Since TON is essentially an open-source version of the original network, the SEC could pursue similar charges against the TON Foundation—although it’s considerably more difficult to pursue DAOs with such charges. As a result, investors should bear in mind the potential regulatory risks of investing in the $TON token.
ZenLedger makes it easy to import transactions from not only exchanges but wallets, providing you with a holistic view of your holdings and accurate cost-basis data. Source: ZenLedger
In addition, investors must track the cost basis of each purchase and report any crypto gains or losses on their tax return. The good news is that ZenLedger can help you stay organized for tax time by aggregating transactions across wallets and exchanges, computing your capital gains and losses, and generating the tax forms you need.
Other Popular Tokens
TON has become increasingly popular since the beginning of the year, but it’s hardly the only token trending sharply higher. Memecoins like Cat in a Dog’s World ($MEW) and Dogecoin ($DOGE) have made a comeback in recent weeks.
Meanwhile, several blockchain ecosystems have also seen their prices move sharply higher. For example, TRON ($TRX)—a decentralized operating system launched in 2017—has been among the top performers, doubling from eight to 16 cents over the past 52 weeks.
Of course, Bitcoin also continues to trend higher following the launch of several spot Bitcoin ETFs, which have added liquidity to the ecosystem. Prices are up from about $40,000 at the beginning of the year to about $70,000 today.
The Bottom Line
The Open Network, better known as TON, has become one of the most successful crypto projects in recent years. After regulators shut down Telegram’s early version, an open-source alternative quickly sprung up in its place. And the $TON token has become a $13 billion economy supported by the Telegram service.
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The above is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
