Pavel Durov's Arrest Spooked TON. But the 'News Cycle Moves On'

Over the weekend, Pavel Durov, the founder and CEO of Telegram, showed up in Dubai — in spirit. At the annual conference for TON, the blockchain

Telegram founder Pavel Durov was present in spirit at the annual conference for TON, a blockchain closely associated with the messaging app, despite being physically located in France due to legal troubles.

Attendees encountered doodles on a large chalkboard plugging a video game inspired by Durov, a life-size cardboard cutout of the CEO at one booth, and a buff, cartoonish depiction of Durov advertising a fitness app at another booth.

Charged with not cooperating with law enforcement on distributing child sexual abuse material and narcotics on Telegram, Durov is required to check in with authorities twice a week and barred from leaving France.

Following his arrest, Durov asserted that charging a CEO with crimes committed by third parties on a platform they manage using pre-smartphone era laws is misguided.

There have been no new developments in Durov's case, according to a French prosecutor’s office spokesperson on Monday.

Initially, Durov's arrest appeared to pose an existential threat to Telegram, one of the world's most popular messaging apps, and by extension, to TON, a key project in crypto.

Toncoin, the native cryptocurrency of TON, ranks among the most valuable cryptocurrencies globally, with a total value of $12.32 billion. While separate from Telegram, the messaging app has chosen TON as its protocol of choice.

If Telegram were to shut down due to a crackdown from authorities, one of TON's big selling points would crumble.

However, over a month and a half after Durov's arrest, Telegram and TON were still chugging along. Attendees at the Grand Hyatt in Dubai for this year's TON confab quadrupled to 2,000 from the prior year.

A TON-branded Tesla Cybertruck was parked in front of the venue as attendees chatted calmly, smoked cigarettes, and conversed in Russian. When asked about the Telegram founder, one attendee remarked, "My hero."

Telegram, as crypto's messaging app of choice, serves as a key pillar in the industry's tech stack. It also had its own dalliance with crypto.

Durov's company raised over $1.7 billion in an ICO for its own cryptocurrency in 2018. But in a 2020 settlement with the US Securities and Exchange Commission, Telegram agreed to return over $1.2 billion to investors and pay an $18.5 million fine.

While the messaging app appeared to wash its hands of crypto, developers outside of Telegram continued working on the project. And in September 2023, Telegram announced that it had adopted TON as its blockchain of choice.

Toncoin surged to an all-time high of $8.17 in June as tap-to-earn games on Telegram, like Hamster Kombat and Catizen, took crypto by storm.

Durov's arrest on August 24 marked the end of that rally. Since then, Toncoin has dropped over 27%.

As Durov awaits his legal proceedings in France, Telegram has begun to implement changes, updating its privacy policy to indicate that it will hand over user information to authorities and tweaking its stance on moderation.

Telegram did not respond to a request for comment.

Jack Booth, co-founder of TON Society, the entity that organized the TON conference, told DL News that there was some anxiety following Durov's arrest.

"It certainly was a bit bad for a couple of weeks," he said. "But the news cycle moves on."

Ilia Dubov, CTO of Fitton, the fitness app that showcased the ripped, cartoon-like Durov at the conference, shared Booth's view on the impact of Durov's legal troubles on TON.

"It is a small threat," Dubov, told DL News. "But as long as people are interested in TON and using TON, it will not significantly affect the TON ecosystem."

However, TON can't easily shake its perceived association with Durov.

"If something happens to Vitalik Buterin tomorrow, would the community of Ethereum react somehow? Would it affect the Ethereum community in some way?" Alena Shmalko, ecosystem lead at the TON Foundation, told DL News. "Of course it would."

But that doesn't mean that TON shouldn't try to further distance itself from its billionaire booster, Shmalko said.

"We need to break this direct relationship," she added.

Ben Weiss is DL News’ Dubai-based correspondent. Reach out to him at bweiss@dlnews.com.