Telegram has raised an initial $850M for its billion-dollar ICO


It looks like Telegram’s billion-dollar ICO has reached its first milestone after the chat app company raised an initial $850 million, according to a filing.

A document submitted to the SEC earlier this week states that the money was raised “for the development of the TON Blockchain, the development and maintenance of Telegram Messenger and the other purposes.” The security is described as “purchase agreements for cryptocurrency” and the filing is signed by Telegram CEO Pavel Durov.

This initial sum is most likely the pre-sale stage of the ICO which, as TechCrunch reported on extensively last month, was targeted at venture capital firms and top figures in the investment community who were given deep discounts to buy Telegram’s Gram token. The pre-sale was originally targeted at raising $600 million, but demand pushed the figure up to $850 million, according to a Bloomberg report.

Telegram initially planned to raise a further $600 million to develop its TON project via a public sale that starts in March, according to documents seen by TechCrunch, but it remains to be seen whether that figure will be adjusted. Bloomberg previously suggested the public sale component would expand to $1.15 billion, bringing the total raised to nearly $2 billion if successful.

Telegram CEO Durov did not reply to an emailed request for comment at the time of writing.

Either way, the sale promises to be the largest ICO seen to date. The pre-sale figure alone tops all over ICOs held by some margin.

Demand around the token sale has been unprecedented, primarily because of Telegram’s unique position within the crypto community. Its messaging app is used by the majority of ICO projects, with its group feature particularly popular among crypto watchers — that includes more shady elements such as ‘pump and dump’ scammers.

Quartz recently reported that pre-sale investors are selling their allocation for upwards of double the price, while a bevy scammers set up fake websites and campaigns to cash in on the hype, as TechCrunch wrote last month.

As for the project itself, Telegram is aiming to develop a series of services alongside its messaging app, including:

  • Distributed file storage akin to services like Dropcoin and ICO company Filecoin
  • A proxy service for creating decentralized VPN services and TOR-like secure browsing environments based on the blockchain
  • Services for decentralized apps, smart contracts and decentralized web browsing experiences
  • Payments for micropayments and peer-to-peer transactions

An early ‘MVP’ version of TON is scheduled for release in Q2 2018 with the Telegram wallet service penciled for the final quarter of the year. Beyond that, its TON services are planned to launch in 2019 but Telegram is still to develop the underlying technology that it claims will enable them.

Despite that, it has been busy shipping new products this year.

Earlier this month, Telegram introduced new versions of its messaging apps for Android and iOS, although its apps were briefly removed for download by Apple after some users were found to be sharing child pornography on them. The company also released a web plug-in allowing businesses to connect with users via the messaging app.

Note: The author owns a small amount of cryptocurrency.

Visa confirms Coinbase wasn’t at fault for overcharging users


Yesterday, we wrote that Coinbase customers were being charged multiple times for past transactions.

While some speculated that the erroneous withdraws were down to a Coinbase engineering issue, Coinbase issued a statement saying it wasn’t liable for the duplicate charges. The blame, instead, rested with Visa for the way it handled a migration of merchant categories for cryptocurrencies, Coinbase said.

While you can read my post yesterday for an in-depth description of what happened, the basic gist is that Visa refunded and recharged (under a different merchant category) a month of old transactions. Many users saw the recharge come through before the refund processed, making it look like they were double charged. Honestly, the issue was likely exacerbated by existing payment rails — it’s normal for refunds to take multiple days to show up on credit and debit statements.

But here’s where it gets weird — this morning Visa issued a statement to some publications shifting the blame back to Coinbase, telling TNW that “Visa has not made any systems changes that would result in the duplicate transactions cardholders are reporting.” We are also not aware of any other merchants who are experiencing this issue.”

But now it seems that the payment giant has revised its stance, and clarified that it wasn’t Coinbase’s fault.

The following is a joint statement from Visa and Worldpay, which is Coinbase’s payment processor partner. While Coinbase initially distributed the statement on its own blog, we’ve also received the statement directly from Visa.

Over the last two days, some customers who used a credit or debit card at Coinbase may have seen duplicate transactions posted to their cardholder accounts.

This issue was not caused by Coinbase.

Worldpay and Coinbase have been working with Visa and Visa issuing banks to ensure that the duplicate transactions have been reversed and appropriate credits have been posted to cardholder accounts. All reversal transactions have now been issued, and should appear on customers’ credit card and debit card accounts within the next few days. We believe the majority of these reversals have already posted to accounts. If you continue to have problems with your credit or debit card account after this reversal period, including issues relating to card fees or charges, we encourage you to contact your card issuing bank.

We deeply regret any inconvenience this may have caused customers.

While the statement doesn’t give a ton of clarity on the issue, it seems to absolve Coinbase of any blame, which is a win for the startup considering it’s been trying to prove to the world that its engineering and customer service teams can stand up to the challenge of maintaining a reliable financial platform.

The startup — is valued at $1.6 billion after raising $100 million last year — has endured some challenging periods as it continues to scale its service to accommodate its 10 million-plus registered customers.

Issues over the past year have included muddling prices on Overstock.com, a flash crash, and a general struggle to keep up as cryptocurrencies boomed in 2017. In December, Coinbase launched an internal investigation into suggestions that company insiders profited from knowledge of impending support for Bitcoin Cash.

Note: The author owns a small amount of cryptocurrency.

Jon Russell contributed to this story. He also owns a small amount of cryptocurrency.

Featured Image: Håkan Dahlström Photography/Flickr UNDER A CC BY 2.0 LICENSE

ICO startups band together to create $100M+ grant fund for Ethereum projects


In a first of its kind, half a dozen ICO companies have come together to collaborate on a new fund that promises to pay out more than $100 million to promising projects in the Ethereum crypto space.

The vehicle — called the Ethereum Community Fund — will be supported by crypto projects Omise Go, Cosmos, Golem, Maker, and Raiden, with Japanese VC Global Brain also in tow. The door is open for other projects and companies to join and the fund size could increase independent of that, too.

These are visible members of the crypto space: among them, OMG’s coin market cap is $1.6 billion, Golem’s is $360 million, and Maker’s is $680 million, according to Coinmarketcap.com, while Raiden and Cosmos are highly-rated from a technical standpoint.

Beyond those projects, the Ethereum Foundation, which controls the Ether token that is the base for the majority of ICO projects, is involved with founder Vitalik Buterin confirmed in an advisory role alongside a number of other industry figures.

The exact scope of the project is not fully clear at this point, but TechCrunch understands that initially more than $100 million in fiat, Ether and other tokens has been pooled for the fund, which is known as ECF. The capital will be deployed via grants — i.e. not in exchange for equity or tokens — that will be awarded to projects, services or business that are seen to “enrich” the Ethereum community.

“This program will be established as a permanent financial endowment to support and aid projects in building crucial open-source infrastructure, tooling, and applications,” reads the fund’s website.

In practical terms, the ‘Infrastructure Grant Program’ is likely to primarily focus on enabling valuable tech on the infrastructure side. For one thing, Ethereum needs to work on increasing its transaction capacity, as Buterin himself has long admitted and is working to improve. There’s also scope for grants to add value in other ways, perhaps with highly-rated technology or projects.

ECF isn’t providing grant details at this point, but sources with knowledge of the plans said grants could range from $50,000-$500,000 in size with the potential for follow-on funding (grants) to enable progress. Even still, that’s a fairly wide berth. We’re only likely to know more once the money begins to be deployed.

“Ethereum has grown beyond my expectations over the last few years, but the work is clearly not finished. Delivering value that matches the hype should be the mantra of 2018; efforts such as the ECF which help organize the development of the ecosystem are going to help to make that possible,” the Ethereum Foundation’s Buterin said in a statement.

The Ethereum Foundation itself has long run a grant program, and last month it announced its own revamped effort to dole out checks of $50,000-$1 million to projects that can help the scaling problem.

There could be more beyond the grants.

The ECF website states that the grant program is a “first step towards supporting the growth of the Ethereum ecosystem,” and we understand that there is the potential for a for-profit investment element to emerge from the organization in the future. (Naming it the Ethereum Community Fund is another hint that it may not just focus on grants.)

As I reported last month, a host of ICO companies are primed to launch investment funds that are aimed at growing their nascent ecosystems and encouraging companies to build on the platforms that they are developing.

Already, we’ve seen Ripple executives taking part in venture capital funding — after backing San Francisco-based Omni — and it stands to reason that the trend will continue given the vast amounts of capital (albeit in crypto tokens) that some of these crypto companies have pulled in via their ICOs. Even with crypto tokens dropping from all-time highs in January, a number of them remain awash with funds and keen to lure developers and other projects to their platforms.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Coinbase blames Visa for glitch that overcharged users


While Coinbase has had its fair share of technical issues the last few months, it seems the latest one may not be their fault.

Earlier today reports started coming in across social media and reddit that Coinbase users were seeing strange charges on their credit and debit cards. Many of these were users being double-charged for a past transaction, although there were also some (unconfirmed) reports of people being hit with as many as 50 duplicate charges.

Understandably, users have been freaking out. It’s never fun to be charged more than you should have been, especially when it overdraws your bank account or maxes out your credit card.

While it was initially unclear what was causing the issue (some were even alleging that Coinbase was withdrawing unauthorized money out of user’s bank accounts) we’ve now heard from Coinbase and have some clarity on what happened.

According to Coinbase, the issue was a problem related to their credit card processing rails, and can be traced back to Visa. Specifically, it’s the result of Visa reversing and recharging past charges in wake of a decision to classify Coinbase transactions as “cash advances”.

As background, last week most banks and card issuers changed the Merchant Category Code (MCC) for Coinbase, meaning all transactions would now be classified as cash advances (which typically means your bank charges a higher fee). None of these extra fees go to Coinbase, and it’s ultimately a negative for the startup since the higher fee will likely lead to a decline in users purchasing cryptocurrency with their credit cards.

While one would assume that these changes would be applied only to future transactions, it seems that today without warning Visa (but not MasterCard or any other card network) reversed and recharged some transactions that occurred between January 22nd and February 11th, in order to classify them under the new MCC.

All of these transactions were refunded at the same time they were re-charged, meaning theoretically users shouldn’t have noticed anything besides the increased fee attributed to the new MCC code. But as anyone familiar with the payments space knows, banking and credit card systems rarely update instantaneously – especially for refunds which can take multiple days to reflect. This delay means that some users may be seeing the second charge come through before the refund, which without clarification would just appear as duplicate charges.

Ultimately, all users should be fully refunded soon. Coinbase has said they’re working with Visa to make sure this happens, and also will reach out to customers who were potentially affected urging them to check and make sure their transaction history is accurate. It’s still unclear how many people will be hit with overdraft fees related to the issue, but Coinbase has said they’ll ensure each customer is refunded in full for any erroneous charge.

While Coinbase has certainly suffered from many technical glitches in the past few months, it seems this one may not have necessarily been caused by them. Of course this doesn’t mean that Coinbase users shouldn’t be upset. Regardless of who caused it no one should ever be erroneously charged (even if it’s temporary), especially if it led to users’ accounts being overdrawn or without funds. Coinbase needs to understand that they don’t operate in a bubble (no pun intended) – the crypto world is known for being rife with scams and fraudsters, and regardless of how legitimate the company is, people are going to assume the worst when their credit cards are charged without their consent.

We’ve reached out to Visa for comment and will update this post when we hear back. Coinbase gave TechCrunch the below statement:

“Based on an internal investigation into the issue, we determined the credit and debit card charges were a result of Visa reversing and recharging transactions. We are working closely with Visa to ensure affected customers are being refunded as soon as possible, as well as notifying all customers that made transaction during the past few weeks that they might be impacted.

The issue stemmed from a recent decision by large banks and card issuers that card networks change the Merchant Category Code (MCC) for purchases of digital currency. Visa changed the MCC for digital currency purchases to a code that allows large banks and card issuers to charge consumers additional fees. 

Coinbase is actively working with major card networks to create a new MCC for digital currency purchases. For the benefit of consumers, we hope that this will not have additional “cash advance” fees as we believe that cards provide wider access to digital currency than just bank accounts.

 We take this very seriously and are taking all necessary steps to resolve this issue as soon as possible.” – Dan Romero, VP and GM of Coinbase

Featured Image: jonrussell/Flickr

CoinTracker will keep track of your crypto as you transfer it between wallets and exchanges


It’s no secret that the cryptocurrency market cap has grown faster than the broader crypto industry. This means that the options for tools to help hold, track and manage your cryptocurrency are still pretty slim.

CoinTracker is one of the recently launched startups trying to help. Part of YC’s Winter ’18 class, it’s a platform to track your crypto across all exchanges, wallets, and even currencies. Today most crypto-enthusiasts try to do this using complicated and bloated Google spreadsheets. But that only works if you’re meticulous about recording each transfer and trade and have been so since you made your first crypto purchase.

CoinTracker tries to automate this process. You start by connecting its to every exchange you use (they currently support 13), but can also add the public address to any wallet that holds Bitcoin, Ethereum, Litecoin and Dogecoin and it will automatically read the balance and update it in your portfolio. If you hold other coins (they support and pull prices for 2,000+) you have to enter those manually, inputting how much you paid for them and on what date.

Having its hands in all of this transaction data allows CoinTracker to essentially detect when you transfer crypto between different exchanges or wallets, which means it can keep track of the cost basis and capital gains of your whole portfolio, regardless of where your crypto is being held.

Keeping track of cost basis and capital gains allowed CoinTracker to create another sought after feature, which is the ability to optimize tax filings by computing capital gains reports using FIFO, LIFO or HIFO accounting.

This tax feature launches today, starting at $29.00 for a tax report of less than 100 transactions and pre-populated IRS Form 8949, all the way up to $999.99 for unlimited transactions including prior years. The existing features, which are syncing with exchange wallets, showing you your performance over time and collating your transaction history into one list will remain free for anyone to use.

The service is by no means perfect, especially for those of us who have been involved in crypto since before 2017 and have transactions and coins scattered across dozens of exchanges (some of which are now shutdown). It’s also missing a few key features depending on which exchanges you link – for example, Gemini doesn’t provide CoinTracker with withdraws or deposits, meaning your cost basis history is a little out of whack.

But it’s a good start, and likely will be near perfect if you’re an average crypto investor who got involved sometime in 2017 and only have a few different currencies across a few major exchanges.

The site also has a price list of the top 100 coins (basically an alternative to coinmarketcap.com) and is working on an investment offering where users can invest in a basket of the top cryptocurrencies.

CoinTracker’s tax feature launches today, and you can check it out here.

Disclosure: Writer owns a small amount of various cryptocurrencies.

Unsplash raises $7.25M to bring cryptocurrency to its free, curated photo platform


Unsplash is rethinking the way photography gets distributed and monetized, and today it’s announcing a $7.25 million Series A to fund those efforts.

The site actually started as a side project for freelance marketplace Crew, but eventually the founders decided to focus on Unsplash and sold Crew to Dribbble.

While the Unsplash photo library contains only 400,000 photos (compared to the 150 million on Shutterstock), CEO Mikael Cho explained that he’s deliberately taken a more curated approach. Whenever someone tries to upload a photo, there’s an automatic check to ensure that it’s high resolution and not posted elsewhere online, plus, “We have a curation team … A person sees every photo that is coming through.”

Cho also said that Unsplash puts a big emphasis on distribution, something that’s boosted by integrations with products like Google Slides, InVision and Medium. As a photo gets used more often, it gets ranked more highly in the platform, so Cho said there can be a “reverse effect,” where photos actually become more rather than less prominent over time.

And it’s hard to argue with the price: All of the photos on Unsplash are available under the same standard license, making them free for both commercial and noncommercial usage.

As a result, the company says it’s had more than 48 billion photo views and 310 million photo downloads since launching in 2013, and it’s currently seeing 10 photo downloads per second.

The lead investor on the Series A wasn’t a traditional venture firm. Instead, Unsplash raised money from OST, the company behind the Simple Token project for simplifying the process of issuing branded tokens. According to a blog post by OST’s Jason Goldberg (who was best known previously for leading Fab), his company’s $5 million investment was 80 percent cash, 20 percent tokens.

“Unsplash and OST intend to tokenize and empower the Unsplash community with blockchain technology, while retaining the open, free-to-use principles that have led to Unsplash’s massive growth,” Goldberg wrote.

Cho argued that the traditional stock photography model has been coming under increasing pressure, leading to falling prices, a trend that will only continue as “everybody is able to be a photographer.” Meanwhile, the value to photographers of using Unsplash isn’t direct payments, but “downloads, attention and distribution.”

So the startup will be working with OST/Simple Token to explore new ways to make money from photos. He said it’s too soon to know exactly what that model will be, but it will involve blockchain technology and cryptocurrency — in his view, they have “a similar ethos” as Unsplash, namely a philosophy of openness and decentralization.

Accomplice, betaworks and Real Ventures also participated in the new round. Cho said he’s still talking to potential investors, so the round size could eventually increase to $10 million.

Featured Image: OST

As Stripe backs away from crypto payments, Coinbase offers a new solution for e-commerce


Popular payment enabler Stripe announced plans to end support for bitcoin last month, but crypto exchange Coinbase is stepping into the gap after it released a new option for online merchants.

Coinbase — which is best known for its service that converts fiat into bitcoin, Ethereum, Litecoin or Bitcoin Cash — is valued at $1.6 billion after raising $100 million last year. The company reportedly booked $1 billion in revenue last year, according to Recode, and it claims to have served over 10 million users. Now, it is looking to give retailers a more flexible option for collecting payment in crypto.

Coinbase Commerce — its new service launched this week — lets merchants add crypto payment options direct to their existing payment flow or added as a separate option. Unlike past retailer solutions from Coinbase, it is hosted independently of the exchange’s services so a merchant can receive crypto to its own wallet. It is also supported worldwide, so not just in the U.S..

The company has its first integration with Shopify, the e-commerce hosting site that claims over 500,000 merchants worldwide.

Offering a solution is one thing, but some merchants have been burned. Steam, for example, stopped support on account of the rising cost of transactions. While there are new solutions coming to the fore to reduce those fees and quicken transactions — Coinbase itself is among the trialists — and the cost has dropped noticeably of late, merchants may still be reluctant on account of price volatility.

Then there’s the question of whether crypto holders will spend their digital currency rather than keep hold of it in the hope that it’ll be worth more.

Bitcoin, Ethereum and others went on a tear last year, with huge valuation gains, but a bloody dip over the past month has seen those prices drop — with the value of bitcoin falling from an all-time high of nearly $20,000 to around $9,000 right now.

Nonetheless, Coinbase has a solution that will allow those who want in, the chance to buy and sell using crypto.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Featured Image: jonrussell/Flickr