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.

Telegram 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.