The founder of social media giant Telegram, Pavel Durov, has been arrested following a regulatory investigation, shaking the cryptocurrency world.
According to reports on August 25, Pavel Durov, the founder and CEO of the social media platform Telegram, was arrested in France on August 24. French television channel TF1 reported that Durov might face charges related to terrorism, money laundering, and drug trafficking.
Following the news of the arrest, Toncoin, a cryptocurrency closely associated with Telegram, plummeted by over 20%. As of the time of reporting, Toncoin had dropped 14.77% for the day, trading at $5.71 per coin.
Who is Pavel Durov?
Pavel Durov, 40, was born in Russia and currently resides in Dubai. He became a French citizen in 2021 and is the founder of the social media platform VKontakte (VK) and the instant messaging app Telegram.
In 2006, Durov founded VK, inspired by Facebook, and later created Telegram in 2013. However, due to differences with management, Durov resigned as CEO of VK in 2014 and left Russia, eventually becoming a French citizen.
Today, VK is the largest social media platform in Russia, while Telegram has a massive user base in Russia, Ukraine, and other countries. It is also one of the primary social platforms for Russian media and Russian-speaking users, with plans to reach 1 billion users next year.
According to Forbes, Durov’s net worth is estimated to be as high as $15.5 billion.
Why was Durov arrested?
According to media reports, French authorities stated that the arrest was due to a lack of regulation on the platform, which has led to a significant amount of criminal activity, including the spread of misinformation and hate speech.
In the early hours of August 25, Russian State Duma Deputy Speaker Davankov announced that he had requested Russian Foreign Minister Lavrov to intervene and assist in securing Durov’s release. The Russian Foreign Ministry has stated that the Russian Embassy in France has already taken necessary measures to gather information regarding Durov’s situation.
What does Durov’s arrest mean for the cryptocurrency world?
It is known that The Open Network (TON) is a blockchain project created by Telegram in 2018. The goal was to build a distributed, high-performance platform supporting decentralized applications and digital assets. Due to regulatory and legal challenges, the project was abandoned in 2020, with the NewTON team continuing its development and renaming itself as the TON Foundation.
In simple terms, TON supports an in-app ecosystem, leveraging Telegram’s vast user base to simplify cryptocurrency transactions and enhance the usability and accessibility of blockchain technology.
At the time, Durov claimed that TON would “far surpass” existing blockchains like Bitcoin or Ethereum and raised $1.2 billion through an Initial Coin Offering (ICO), with major venture capital firms such as Sequoia Capital, Benchmark, Kleiner Perkins, and Lightspeed participating.
Due to Durov’s arrest, concerns over Telegram and its cryptocurrency project’s potential regulatory compliance have surged, leading investors to sell off related tokens significantly.
Coincidentally, just before his arrest, Durov announced in July that Telegram’s user base had surpassed 950 million, with a significant portion of the growth attributed to cryptocurrency games integrated into the platform’s “mini apps.” Notably, the largest game, Hamster Kombat, reportedly attracted over 300 million players in the months leading up to the launch of its token airdrop (HMSTR).
Public information reveals that Telegram has not gone public, but as of April this year, the platform had raised over $1.5 billion through bond sales and $1.7 billion through cryptocurrency projects.
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