telegram ico

The company behind wildly-popular encrypted messaging app Telegram has scrapped plans to open its initial coin offering (ICO) to the public, says an anonymous source close to the matter.

According to the Wall Street Journal, Telegram — which is developing a blockchain ecosystem called the Telegram Open Network (TON) — has determined that it does not want to enter the murky regulatory waters currently governing the ICO industry.

That’s not to say the company is hard up for cash.

As BlockExplorer reported, the chat platform already reported to the Securities and Exchange Commission (SEC) that it had raised $1.7 billion from fewer than 200 investors during two private ICO presales, which the firm conducted during the first three months of the year.

Those funds will purportedly be used to develop TON, which the company has privately described as a “third-generation blockchain” capable of processing millions of transactions per second. However, skeptics have wondered aloud whether that money will instead be used to fund Telegram’s general operations, as the app does not currently generate revenue.

One anonymous source cited in the report connected Telegram’s decision to shelve the public ICO to the SEC’s increasing oversight of the burgeoning ICO space, which has seen startups collectively raise billions of dollars over the past calendar year — and fraudsters make off with a noticeable percentage of it.

Since the presale excluded retail investors, Telegram was able to claim an exemption from traditional securities registration requirements.

However, opening the offering to the public would raise a number of thorny regulatory issues, and many observers believe the SEC is preparing to bring down the hammer on noncompliant ICO operators.

If a company as well-known as Telegram conducted a conventional ICO, it would present the SEC with a high-profile target if it desired to make an example intended to frighten other market participants into compliance.

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Say what you like about the Telegram ICO, but you can’t fault it for a lack of ambition.

The secretive initial coin offering (ICO) — sponsored by the encrypted messaging app and its founder, Russian entrepreneur Pavel Durov — is reportedly aiming to raise more than $2 billion to bootstrap the development of its “third-generation blockchain,” known as the Telegram Open Network (TON). And that figure, it’s important to note, only refers to the presale.

Telegram has been infamously opaque about the token sale — and the details of the TON — and even prospective investors have complained that the company has refused to give specifics about the fundraising round.

Nevertheless, the company does not seem to be having trouble finding investors will to plunk down millions of dollars to contribute to what will almost assuredly be a record-setting ICO. A document filed with the SEC this week indicated that the first round of the Telegram ICO — which began in late January — raised $850 million from 81 investors.

This document, incidentally, was filed the same day that Kaspersky Lab revealed that Russian hackers had exploited a security flaw in the Telegram desktop application to deceive users into downloading cryptocurrency mining malware.

Following this successful funding round — which dwarfed the firm’s earlier-reported target of $500 million — Quartz reports that Durov believes the Telegram ICO can raise another $1.15 billion from presale contributors.

“The combination of the scale and quality of the demand has led us to rethink our strategy for both this transaction and the next round,” the publication reports John Hyman, Telegram’s chief investment adviser, as stating in offering documents distributed this week.

However, in keeping with the shifting goalposts that have accompanied the Telegram ICO since it was first announced, freelance journalist Adrianne Jeffries reports that a source has told her that Telegram is “planning to ditch the public sale entirely” and add two more presale rounds targeting $850 million and $300 million, respectively.

“Durov likes the sense of power over investors and the fact that he forces them to play by his rules,” she cites the source as saying.

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Messaging app Telegram has become the latest victim of cryptocurrency mining malware, as researchers at Kaspersky Lab have revealed a now-patched vulnerability that allowed hackers to exploit a flaw in the platform’s file transfer service.

Kaspersky said that the vulnerability, which was first exploited in March 2017 and discovered by researchers in October, was a “classic right-to-left override attack.”

Simply put, this attack exploited the portion of Telegram’s software that enabled the messenger to recognize Arabic and Hebrew, languages which are read right to left. The hackers were able to use this feature to reverse the order of characters in filenames, which allowed them to disguise suspicious file extensions as images or other seemingly non-threatening file types.

After users downloaded the files, embedded scripts would silently unleash a malware payload on the target operating system. One of the most prominent payloads was malware that harnessed the target computer’s processing power to mine cryptocurrencies for the attackers.

cryptocurrency mining malware
Source: Kaspersky

These miners were primarily developed for the Equihash and Cryptonight mining algorithms, which are employed by privacy-centric cryptocurrencies Zcash (ZEC) and Monero (XMR), respectively.

Although the vulnerability affected all Telegram users, Kaspersky said that it appears only Russian hackers exploited it, which is why the vast majority of victims were Russian residents.

These types of attacks have become quite common in recent months, particularly since the development of CoinHive, a mining script that can be implemented into the background of websites and used to harness the computing power of visitors.

As BlockExplorer reported, more than 4,200 websites hosted by government agencies in the US and UK have recently been compromised through the use of a tool called BrowseAloud and injected with CoinHive-based mining malware scripts.

Telegram denied that exploit was the result of a “real vulnerability,” arguing that users bore responsibility for choosing to download the files.

“This is not a real vulnerability on Telegram Desktop, no one can remotely take control of your computer or Telegram unless you open a (malicious) file,” Reuters cited the company as saying in a statement.

Nevertheless, the timing of the vulnerability’s disclosure is awkward for Telegram, as the company is reportedly preparing to launch a record-shattering initial coin offering (ICO) that could raise up to $2 billion.

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