If Telegram’s ambitious blockchain project fails, investors can’t say they weren’t warned.

Along with the white paper and technical documents, prospective buyers in what could be one of the largest-ever initial coin offerings (ICOs) have received a nine-page memorandum spelling out the risks of buying the tokens. For investors in traditional markets, such a litany of dangers is a familiar sight – the documents list almost every conceivable thing that could go wrong.

But the Telegram document, a copy of which was obtained by CoinDesk, is striking because the company isn’t offering equity. Instead, the tokens would be used for payments between users and to access various services on the proposed Telegram Open Network, once it is built.

The document may have been written out of an abundance of caution, considering the size of Telegram’s initial coin offering (ICO) – potentially $2.5 billion.

As such, CoinDesk has outlined some of the most salient hazards listed in the document, which has the lawyerly title “Certain Risks Associated with the Purchase, Sale and Use of Grams.”

1. ‘Uncertain regulation’

Anyone who’s been following initial coin offerings knows that there are a lot of question marks about what regulators might do. As the document states, “It is difficult to predict how or whether governmental authorities will regulate such technologies.”

A government could impose liquidity requirements on Telegram or find that grams are a regulated equity, requiring registration, the document warns. If regulation in one place became too onerous, Telegram might exit the country or even shut the project down, it says.

On the other hand, Viktor Mangazeev, CEO of blockchain fantasy sports platform MyDFS, says Telegram may have a regulatory edge over rival messaging platforms that makes it uniquely suited to do a fundraiser like this.

There’s a few messaging apps that are larger than Telegram, but the leaders, Facebook Messenger and WhatsApp, are based in the U.S., which has been hesitant about cryptocurrency. WeChat is another dominant platform, but its home, China, has recently turned hostile to crypto.

Of the popular messengers outside those two countries, “Telegram is the most technologically promising of them,” Mangazeev contended.

(Telegram’s headquarters location is hard to pin down. Its SEC filing is under “Ton Issuer,” based in the Virgin Islands. Telegram itself is currently based in London, according to Crunchbase.)

2. ‘Legal and Regulatory Factors’

“The TON Blockchain will operate in a new and developing legal and regulatory environment. There is no established body of law or court decisions concerning blockchain and smart contracts,” the document says.

It goes on to describe how licenses might be necessary, including crypto-specific ones governments might invent after the token sale but before the TON blockchain goes live.

3. ‘Government and private actions’

Perhaps most disconcerting for a project like Telegram’s, U.S. regulators are far more likely to regulate by way of enforcement actions early on, because cases take less time than promulgating new rules.

Joe Dipasquale of Bitbull Capital, a crypto fund of funds, told CoinDesk he has not invested in grams, and is concerned it will show up on the SEC’s radar.

“I expect the SEC to pay careful attention to TON given that it’s expected to be the largest ICO, and participants in this ICO should be aware of this,” he wrote in an email.

The company is using a simple agreement for future tokens (SAFT) structure for this sale. The SAFT was conceived as a way to do ICOs without running afoul of U.S. securities laws. But if the SEC decided it didn’t like SAFTs, that could be a problem for the largest ICOs.

4. ‘Development and launch of TON’

The paper says, “Telegram may not retain the services of developers with the technical skills and expertise needed to successfully develop the TON Blockchain and progress it to a successful launch.”

Luckily for investors, Telegram has written in a refund provision for investors. That said, the company also reserves for itself the right to spend the money on all kinds of things.

5. ‘Risks inherent to blockchains’

The document delineates risks inherent to open blockchains. These include the possibility of mistakes in the code.

Quantum computing could break all the encryption. Later on, as major changes are needed, nodes may not move to make them and the system could break down.

6. ‘Integrating TON and Telegram’

The popularity of this offering is no doubt driven by Telegram’s large and active user base. If for some reason the team fails to integrate the TON blockchain with the mobile messenger, the document says, “adoption of grams as a form of currency within Telegram Messenger’s existing ecosystem may be more limited than anticipated.”

To say the least; it’s hard to see many people adopting a utility token that doesn’t, um, have utility. But this risk seems like one of the more improbable ones, given the number of apps out there that are integrated with blockchains.

7. ‘Issuer and use of funds’

Telegram doesn’t have any restrictions on how it uses the funds, so even if it fails to build TON and it needs to terminate the contract with the token buyers, it may not have any money left to distribute back to holders of grams when that happens.

This lack of restriction allows Telegram to use funds raised to shore up the messaging app, even if it never delivers the blockchain, said Anton Rozenberg, the former chief technical officer of VKontakte, the Russian Facebook equivalent which Durov founded before he started Telegram.

“They spend all the money to buy servers for 10 years out, for example,” Rozenberg.

So, while that may be cold comfort for the investors in the ICO, Telegram’s continued relevance seems all but guaranteed at this point.

8. ‘Blockchain and crypto might never catch on’

Lumping a few of the document’s headings together here. Don’t call them FUD; it is true that any of the above could happen.

Notably, Telegram’s risks document doesn’t list one of its most significant threats, that of Google or Apple’s removal of its mobile app from their respective stores.

Gurinovich described this by writing:

“Worst-case scenario is also possible – if the Telegram app is removed from Apple Store and Google Play, just because these companies don’t approve when they are not involved in financial transactions … there’s no court in the world which can help to get back the audience.”

Still, Mike Brusov, CEO of Cindicator, a decentralized market analytics platform, told CoinDesk that people are investing in Telegram because they believe it will lift the whole industry.

He commented:

“It will be an absolute breakthrough for the market, that will bring a lot of attention to it. So it’s their way to invest in the idea of ‘trust in crypto, trust in decentralization.’ It’s their investment in the ecosystem.”

App image via Shutterstock