- Following the detention, Pavel Durov's cryptocurrency venture faces a significant setback.
Pavel Durov, renowned CEO of the popular encrypted communication app Telegram, departed his private aircraft accompanied by a bodyguard and a companion. A scheduled dinner at a Paris restaurant was announced by French media. However, upon arriving at Le Bourget airport, Durov, 39, was detained by law enforcement and taken into custody.
Durov is known for his leadership role in the tech industry's messaging scene, boasting over 900 million monthly users. However, his app's success comes with controversy, as he often disregards legal obligations in various countries. French authorities have initiated an investigation against him, alleging suspicion of fraud, drug trafficking, organized crime, terrorism funding, and cyberbullying. A TV1 investigator reportedly stated, "He made a mistake tonight, but we are yet to know the reasons." It was previously known that French authorities had been seeking Durov, who typically resides in Dubai.
Upcoming IPO
Durov's sudden arrest may heavily impact Telegram, as the company operates with a small staff of just 50 employees, including his brother Nikolai. With an estimated net worth of $15 billion, Durov is integral to the app's success. Over the years, Telegram evolved into a social network with channels and even planned an upcoming IPO in the US.
The uncertainty following Durov's arrest has negatively affected the linked crypto project TON (The Open Network). The temporary decrease in Toncoin's price led to a $2 billion decrease in the project's market capitalization. The TON project aimed to introduce cryptocurrencies to the mainstream market, but its success now hangs in the balance.
TON had high ambitions and potential, as an active part of the crypto community largely operated on Telegram for exchange purposes. Nikolai Durov, the programming genius behind Telegram, conceptualized the blockchain years prior to launch, and raised $1.7 billion from notable investors. However, the project faced its first major challenge following problems with the US financial authority SEC, which resulted in Durov and his team having to refund some capital to investors.
TON's Future Without Telegram
An independent team was meant to continue the blockchain project, with the Durovs officially transferring ownership to the community. Since then, the TON team has emphasized the independence of the cryptocurrency and the app. But without Telegram, would TON still hold value?
In reality, the connection between TON and Telegram remained close, contributing to the blockchain's successful relaunch. TON quickly rose to rank amongst the top 10 cryptocurrencies, with a market value of $25 billion during the spring. The extent of Durov's remaining Toncoin holdings remains unknown.
On the Telegram platform, the TON blockchain has been deeply integrated, managing the advertising network and integrating TON wallets into the app. It enables direct transfers between Telegram users. Figures suggest that the Tonkeeper wallet app temporarily became one of the most frequently used apps, even reaching the top slot in Germany in the spring. With 900 million monthly active users, Telegram and TON seemed poised to revolutionize the mass adoption of crypto applications.
In response to Durov's arrest, representatives from the TON network reaffirmed their commitment:
"In light of recent developments concerning Telegram's founder Pavel Durov, we wish to assure everyone that the TON community remains active and functioning as usual.
As a community dedicated to upholding freedom of speech and decentralization, we stand by Pavel during this difficult time. Pavel's advocacy for these principles has inspired millions."
Emphasis on the project's independence from Telegram was also highlighted, with the market's temporary drop viewed as an overestimation. The success of adoption, however, may strongly depend on Telegram's future and the fate of the major messaging platform.
Prominent figures like Elon Musk and David Sacks have voiced support for Durov, while whistleblower Edward Snowden has aligned himself with the Telegram founder.
This text originally appeared in Finance Forward, the magazine for the new financial world, jointly created by Capital and OMR.
After being taken into custody at Le Bourget airport, Durov was formally charged with the alleged offenses by French authorities. Despite his arrest, the TON community assured everyone that the project remains active and operational.
