Toncoin and Telegram’s future is dangling by a thread amid Pavel Durov’s arrest. Here’s the story behind the arrest of the Telegram founder.
French television news agency TF1 TV reported that Telegram CEO Pavel Durov was arrested at Le Bourget airport, near Paris, France on August 24th. Reportedly, he flew in from Azerbaijan in his private jet, accompanied by his bodyguard and an unnamed woman. Durov is a Russian-born French citizen.
A day after his hearing, according to the official press release of the public prosecutor, Durov was charged with being compliant. The most serious charges were possessing child pornography, cybercrime, refusing to cooperate with ‘competent authorities’, and money laundering, among other charges.
The PR noted that Durov’s custody could be extended to 96 hours or till August 28th. Emanuel Macron, the French president clarified that the arrest was not a political move.
When Durov was arrested, Toncoin (TON) and Notcoin (NOT) fell over 20% and are yet to recover completely. These tokens reacted to Durov’s arrest because, while minted on the TON blockchain, they are integrated with the Telegram application. The integration with Telegram is partly responsible for their massive adoption.
TON – Telegram’s Ticket to Profitability
According to his Telegram channel, until 2020, Durov funded Telegram with his own money. In 2020, when they launched premium features and ads for public channels to establish a sustainable revenue source. Today, there’s a fast-growing ecosystem of ‘Mini Apps’ and ads that form a major portion of Telegram’s revenue, and Toncoin has a big role to play in it.
The premium features and mini apps (Notcoin, Hamster Combat are major mini apps) have been successful, but the earnings potential is still largely untapped. In April this year, Durov said that Telegram would hit the 1 Billion users mark within a year.
Telegram launched its ad-revenue sharing program in March this year. The ad-revenue program allows channel owners to get a 50% cut for the ads they allow on their channels, however, the payment is made only in Toncoin. The ad program is only for those public channels with 1000 or more participants.
TON is the native currency of The Open Network, a blockchain that was co-developed by Telegram’s engineers. However, at launch, the names of the token and the blockchain were different. TON initially stood for Telegram Open Network and Gram was the native token.
Why Telegram is Facing so Much Heat
Telegram is an end-to-end encrypted messaging service like WhatsAapp and Messenger. It’s popular in Russia, Ukraine, and most other former republics of the erstwhile USSR. Hitherto, apparently, Telegram has never cooperated with law enforcement agencies and governments despite requests.
Durov emphasizes that neutrality is central to Telegram’s foundation. Law enforcement agencies contact Telegram to go after criminals who communicate via the messaging service. According to an NBC report, Telegram claims that it frequently shuts down channels facilitating malicious and illegal activities.
The French investigation in which Durov was arrested in related to Telegram’s alleged refusal to cooperate with authorities. Per NBC, when the National Center for Missing & Exploited Children (NCMEC) wanted Telegram to report child abuse, they ‘refused its outreach’.
Reportedly, TON is being used to conduct illegal transactions as well. A Fortune Crypto report demonstrated how Telegram was being used for illegal activities such as the sale of drugs, hosting firearms blackmarkets, etc.
Telegram’s ad-revenue program works in the same way for everybody as long as the basic conditions are met. The problem is that criminals could use this program to generate funds anonymously. Independent Ukrainian researcher Yaroslav Azhnyuk’s analysis suggested that TON was being used to hide ill-gotten wealth.
Azhnyuk noted that Durov’s arrest and hearing could be much larger than previous black swan events in crypto.
However, it’s important to note that Azhnyuk has Ukrainian roots and presents the perspective of a Ukrainian entrepreneur. Kremlingram, a Ukrainian independent analysis firm and Azhnyuk have pointed out that Durov may have links with the Russian government. They have also suggested that Durov’s ostensible escape from Russia might be hiding Telegram’s true relationship with Russians.
What Telegram CEO’s Sentencing Could Mean for Toncoin (TON)
If Durov gets sentenced, which could be up to 20 years given the seriousness of the potential charges, the consequences are unclear. It’s unlikely to affect Telegram’s operation and TON’s performance since the company and the network are largely decentralized and are becoming more decentralized.
If Telegram cooperates with agencies, just like Meta, its credibility and reliability as a privacy-focused app would suffer. This could translate to a drop in TON’s adoption and price.
The TON Foundation, which supports the growth and development of the TON network is an independent non-profit based in Switzerland. Telegram and TON network are independent. The TON blockchain is one of the fastest blockchain networks. Therefore, even if TON or any other crypto is no longer supported on Telegram, TON could continue to be used just like other cryptos.
Per Forbes, Durov’s net worth is nearly $15 Billion or around 12 Billion Euros. So he has the resources to fight a legal battle.
Nevertheless, whether Durov is guilty is yet to be determined. Ukrainian sources claim Durov is in cahoots with Russians even though the Russians and Durov deny it. While in the West, the focus is on protecting privacy and freedom of speech, #FREEDUROV is trending like wildfire. Investors should be careful while consuming news on Durov’s situation.
