In the wake of Telegram CEO Pavel Durov’s bombshell
arrest
in France last weekend and subsequent
criminal indictment
, much is still uncertain—particularly, how the high-stakes drama will impact Telegram’s massive crypto ambitions.
This year, Telegram became perhaps the most prominent company to ever jump with both feet into the cryptosphere. The dominant messaging service encouraged the proliferation of an ecosystem of on-chain, in-app
games and services
powered by Telegram’s blockchain of choice,
The Open Network
(TON). Those so-called “mini apps” exploded in popularity this spring, largely thanks to their ability to earn users crypto rewards via
token airdrops
.
Momentum from mini app activity catapulted Telegram to a record
950 million
monthly active users in July, and Telegram has directly embraced TON by using it to pay channel operators a share of advertising revenue, along with launching an in-app currency called Stars that’s linked with TON.
The company’s new path appeared so limitless that some TON developers prophesied the app might soon ride its on-chain mini app model to become the
West’s version
of China’s “everything app,” WeChat.
But crypto is also,
notoriously
, a legally risky sandbox to play in. So now that Telegram appears to have awoken the regulatory beast, could the company’s crypto future be in jeopardy?
“How big do they want to get?”
The charges filed against Telegram CEO Pavel Durov on Wednesday do not mention cryptocurrency whatsoever. They focus instead on content related to illegal topics like child pornography and drug sales that Durov allegedly allowed to proliferate on his platform.
But the timing of the indictment—in the midst of Telegram’s aggressive push to make crypto-backed financial services a central offering—speaks loudly, according to Seth Goertz, a former U.S. Attorney specializing in cryptocurrency and cybersecurity.
“The more they go down that road, the more they’re inviting scrutiny,” Goertz told
Decrypt
of Telegram’s finance and commerce-related ambitions. “How big do they want to get?”
The former prosecutor specifically pointed to the integration,
in April
, of the popular stablecoin
Tether
(USDT) with both TON and the Wallet app on Telegram. While the move was a massive boon for Telegram’s mini apps, allowing users to transact in a dollar-backed currency that doesn’t fluctuate nearly as much as TON’s
native token
, the stablecoin also has a long track record of fueling
illicit activity
due to that same attractiveness.
“If governments are seeing large amounts of Tether being moved through Telegram, it is going to attract tremendous scrutiny, for sure,” Goertz said. “The dollar is a powerful thing.”
Decrypt
reached out to numerous TON developers and creators of Telegram mini apps for this story regarding their views on Durov’s arrest, and how it might impact the future of Telegram’s crypto-related ambitions. All declined comment.
Telegram did not respond to multiple requests for comment on this story.
Crypto tech vs. crypto attitude
Not everyone is adamant that the factors that compelled the French government to arrest Durov have anything to do with crypto or any other technology peddled by Telegram—potentially indicating that the company’s “everything app” ambitions may not be the center of the story.
Despite this week’s uproar on Crypto Twitter—which framed Durov’s arrest as an assault on user rights to privacy—Ben Rubin, the founder of the once-trendy, since-shuttered video chat app Houseparty, believes Telegram didn’t ruffle many feathers with its actual privacy features.
In reality, the app is actually
less secure
by default than other popular messaging platforms with automatic end-to-end encryption like Signal, iMessage, and even WhatsApp.
Crucially, though, Telegram’s leadership is notoriously standoffish when it comes to dealing with government entities. This created a perfect storm, in Rubin’s opinion, with Telegram sitting on lots of vulnerable data about its users, but refusing to hand it over.
“My intuition is that this has nothing to do with crypto,” Rubin told
Decrypt
. “When a platform not only doesn’t protect user privacy—by not introducing end-to-end encryption—but also pisses off the regulators, you get the situation that you’re in now.”
In that sense, Telegram and Durov may now be in trouble less due to crypto tech, and more due to embodying the same kind of anti-establishment attitude that has fueled the crypto industry and made Durov something of a free speech icon.
When French prosecutors announced charges against Durov on Wednesday, they specifically underscored how Telegram’s failure to communicate whatsoever with government entities was a crucial factor that aggravated the entire situation.
Rubin, who is currently building Towns, a permissionless app for group chats that runs on Ethereum layer-2 network
Base
, said such conflict could be easily avoided if Telegram adopted an inverse to its current approach: encrypting all user messages automatically, and letting law enforcement in—when necessary—to parse through other more extraneous data.
“This is how you actually find a good balance where the regulators don’t have too much access to things, and they cannot abuse the power,” Rubin said.
“But they actually need to do work,” he added of regulators. “And I think we will be in trouble if, for anyone who builds online communication, regulators come and ask to cooperate and we all give them the finger. That’s not going to work out.”
In recent days, Durov’s arrest has become a
rallying cry
for tech leaders ranging from Elon Musk to prominent crypto investor and former Coinbase CTO Balaji Srinivasan.
Crypto advocates in particular have rushed to the Telegram founder’s defense, framing his prosecution as an existential attack on the foundational pillars of the decentralization movement.
But was it actually groundbreaking crypto tech that so irked the French government in Durov’s case? Or rather, his defiant and dogmatic personification of the
crypto persona
?
Edited by Andrew Hayward
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In conclusion, the recent events surrounding Telegram CEO Pavel Durov’s arrest and subsequent indictment have raised significant questions about the future of Telegram’s ambitious crypto ventures. The intersection of Telegram’s massive growth in the crypto space, particularly with the rise of on-chain mini apps and services, with legal challenges and regulatory scrutiny, paints a complex picture of the company’s trajectory.
While some attribute Telegram’s current legal woes to issues unrelated to crypto, such as privacy concerns and non-compliance with government requests, others see it as a potential hurdle for the company’s crypto-related activities. The integration of stablecoins like Tether with Telegram’s offerings has also brought additional attention to the platform from regulators and law enforcement agencies.
As the crypto community rallies around Durov in support, the broader implications of his case on the industry and the decentralization movement remain uncertain. Moving forward, balancing innovation with regulatory compliance will be key for companies like Telegram that operate within the ever-evolving crypto landscape.
Overall, the story of Telegram and Pavel Durov serves as a reminder of the challenges and opportunities that come with pushing the boundaries of technology and finance in a rapidly changing world.