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WhatsApp rival Telegram raises $850m in ICO

A controversial messaging app that rivals WhatsApp has raise..

A controversial messaging app that rivals WhatsApp has raised millions of dollars by issuing its own version of bitcoin.

Telegram is one of several tech companies that has been singled out by the UK government – along with Facebook's WhatsApp and Apple's iMessage – after terrorist attacks in London and Manchester last year.

Messages sent using these services are secure using encryption, protecting users information, but mean they can not be accessed by security services and other authorities investigating such incidents.

Read more: Estonia is moving forward with plans for its own version of bitcoin

The Russia-founded and now Dubai-based tech company which has nearly 200m users, has dismissed the wrangling and is ploughing ahead with raising cash using cryptocurrencies – a move also likely to draw some controversy.

Telegram has already raised $850m (£605m) through what's known as an initial coin offering (ICO) or token sale, according to fresh filings made with the US Securities and Exchange Commission (SEC).

Investors have pledged the cash for the app's gram token, a cryptocurrency like bitcoin that Telegram has issued and which will form part of a new blockchain payments platform the tech company is planning to build, the Telegram Open Network (TON).

The pre-sale raise comes ahead of a wider offering in which it could raise up to $2bn, according to reports, which would represent the biggest ICO to date.

Telegram is one of the most high profile companies to embark on an ICO and has attracted interest from top Silicon Valley venture capitalists.

Read more: Facebook is banning adverts for bitcoin and binary options

But the process of issuing coins is completely unregulated and can be highly susceptible to scams. Fraudsters last month raised cash for a startup supposedly called Prodeum that wanted to track food on the blockchain. It disappeared shortly afterwards leaving only the word penis on its website in one of the most bizarre rip-offs involving token sales so far.

Several authorities and regulators, including the Financial Conduct Authority in the UK, have warned investors of the risks of ICOs, which last year collectively raised more than $5bn amid the rising price of cryptocurrencies.

The mind behind Telegram, Pavel Durov, previously founded Russia's answer to Facebook, VKontakte, now known as VK. The social network was bought up by, the internet giant which counts Aresnal shareholder and billionaire Alisher Usmanov among its investors.

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