One Yr On: Telegram’s Privateness Battle With France Stalls, Leaving TON in Limbo

Key Takeaways:

• Telegram CEO Pavel Durov has criticized his arrest by the French police final 12 months as “legally and logically absurd.”
• The incident continues to forged a shadow on the TON blockchain, with the native Toncoin cryptocurrency shedding 40% of its worth because the arrest.
• Whereas TON’s core infrastructure stays steady, person exercise (-88%) and developer momentum have slowed sharply.

The arrest of Telegram CEO Pavel Durov final 12 months despatched the TON ecosystem reeling. One 12 months later, the case continues to be unresolved, leaving the Telegram-linked blockchain undertaking The Open Community (TON) in limbo.

Durov was arrested at a Paris airport on August 24, 2024, beneath a warrant associated to the Telegram messaging app. The 40-year-old billionaire faces a number of costs in France, together with claims of weak content material moderation.

Durov spent 4 days behind bars earlier than posting €5 million bail. Earlier this week, the Russian-born tech entrepreneur, who is understood for his concentrate on privateness, criticized his arrest as “legally and logically absurd.”

“Arresting a CEO of a significant platform over the actions of its customers was not solely unprecedented — it was legally and logically absurd,” Durov stated.

Durov stated the French “felony investigation is struggling to seek out something that I or Telegram did flawed.” He claimed that Telegram all the time complied with legally binding requests from French authorities.

“Paradoxically,” Durov added, “I used to be arrested because of the French police’s personal mistake: earlier than August 2024, they ignored French and EU legal guidelines and hadn’t despatched any of their queries to Telegram by way of the required authorized course of. They might have discovered the proper process just by googling it or asking.”

Since his launch on bail, Durov has remained beneath judicial supervision and is required to verify in with the French police each 14 days. He says the case has up to now completed little past “large harm to France’s picture as a free nation.”

Shock to the TON Ecosystem

Durov’s arrest didn’t simply rattle European privateness debates. It additionally sparked a disaster for the TON blockchain, a undertaking initially incubated by Telegram and later handed to the open-source neighborhood beneath TON Basis.

TON had been gaining traction in 2024 as a hub for decentralized finance (DeFi) platforms and so-called “tap-to-earn” video games — like Hamster Kombat and Catizen — built-in with the roughly one billion Telegram customers.

However when information of Durov’s arrest went public, Toncoin, the native token of the TON blockchain, nosedived, shedding $2.4 billion of its market worth inside 48 hours.

“Toncoin’s worth slumped by over 20% inside a couple of days of his arrest,” stated Shawn Younger, chief analyst at crypto alternate MEXC. “The shock didn’t cease there. Over the previous 12 months, TON has misplaced over 40% of its worth.”

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The knock-on results have been extreme. Liquidity drained from decentralized exchanges constructed on TON, similar to Ston.fi and Dedust, whose complete worth locked (TVL) plunged by greater than 60% in August 2024.

Younger famous that whereas some builders saved constructing on TON, ambiguity round Durov’s authorized scenario tampered with developer curiosity, telling Cryptonews:

“The arrest created a cloud of uncertainty. Builders turned cautious, and institutional engagement cooled off. The present tempo of deployment and new undertaking launches is under the degrees anticipated for a blockchain of TON’s scale.”

In the meantime, the entire worth locked within the TON community has plummeted 71% to $144 million since Durov’s arrest one 12 months in the past, per Defillama information. TVL is a measure of person exercise and adoption in a DeFi protocol.

It’s notable that the TON blockchain had already been shedding worth since hitting a peak of about $770 million in TVL in late July 2024. By the point Durov obtained arrested, the protocol had misplaced over $260 million in complete worth locked.

Illia Otychenko, lead analyst at crypto alternate CEX.io, stated the downturn uncovered deeper fragilities throughout the TON ecosystem.

“The arrest prompted a short-term volatility shock, however the long-term problem is TON’s heavy reliance on speculative recreation mechanics relatively than sustainable use circumstances,” Otychenko advised Cryptonews.

A Fragile Consumer Base

Within the weeks following Durov’s arrest, person exercise on TON spiked — not because of the authorized drama, however due to viral tap-to-earn video games constructed utilizing Telegram’s “mini apps”, internet apps that run contained in the messaging platform.

The video games loved an enormous following. At one time, Hamster Kombat alone claimed to have 300 million customers. Gamers may faucet their smartphone screens endlessly for rewards and later commerce them for Toncoin.

However enthusiasm declined as rewards failed to fulfill expectations. “As person curiosity light, exercise in these video games — the principle driver of TON engagement in 2024 — rapidly collapsed,” stated Otychenko.

Every day transactions on TON’s workchains, the place practically all end-user exercise takes place, tanked 76%. Every day energetic customers dropped by 88% and month-to-month app income plunged by 80%, in accordance with information from CEX.io alternate.

“[It] highlights that the community has been struggling to generate sustainable earnings and engagement after the fallout of tap-to-earn video games,” Otyechnko detailed.

Even the speed of recent adoption slowed dramatically. Final 12 months, as much as half of TON’s each day energetic customers have been new addresses. Now, that determine is nearer to twenty–25%.

“This means TON is having issue bringing in new customers and is more and more depending on present members,” he added.

The masterchain, TON’s validator and governance spine, remained comparatively steady. Every day transactions rose from 80,000 to 100,000 whereas energetic customers fell from 900 to 800.

Otychenko stated the “modest decline factors to cooling builder momentum however not structural instability.” Nonetheless, for a community pitched as the following international blockchain, momentum seems to have stalled.

Privateness vs. Regulation

Durov’s arrest shook the tech world: if Telegram’s CEO might be detained for crimes dedicated by customers, no social media boss was protected. X (Twitter) proprietor Elon Musk promptly denounced the arrest as an assault on free speech.

Fb CEO Mark Zuckerberg wrote a letter to the U.S Home Judiciary Committee regretting the agency’s determination to censor content material thought of by the Biden Administration as misinformation in the course of the pandemic.

At its core, the Telegram founder’s arrest highlights the strain between privateness and legislation enforcement. Governments are fearful that social media is turning into too highly effective in shaping public opinion, analysts say.

Then again, Durov has lengthy promoted Telegram as a haven for safe communications, resisting stress from governments to weaken its encryption or share person information.

In response to its web site, Telegram’s servers are unfold worldwide. In consequence, the platform “can make sure that no single authorities or block of like-minded international locations can intrude on individuals’s privateness and freedom of expression,” the corporate explains.

Nonetheless, the messaging app has typically discovered itself within the crosshairs of regulators over its laid-back content material moderation insurance policies.

For instance, in 2023, Brazil quickly banned Telegram after it refused to reveal the information allegedly linked to neo-Nazi teams after violent assaults on colleges.

In 2014, a 12 months after creating Telegram, Durov was pressured to depart Russia after the Federal Safety Service (FSB) reportedly pressured him to promote his shareholding within the platform. A Moscow court docket later banned Telegram after it refused to share encryption keys with the key service.

Right this moment, Telegram is likely one of the most generally used social media platforms in Russia. The army makes use of the service to speak the warfare effort, whereas civilians depend on it for unfiltered information protection.

In France, Durov was charged with a number of crimes, together with complicity in drug trafficking, dissemination of kid pornography, fraud, cash laundering, and unlawful provision of cryptographic providers.

TON Market Sentiment Nonetheless within the Stability

The authorized uncertainty has confirmed as damaging as any technical shortfall for Toncoin traders.

“In markets [that are] as sentiment-driven because the crypto area, regulatory ambiguity alone is usually a heavier drag than technical challenges,” stated Younger, the MEXC analyst.

Institutional gamers, whose involvement is essential for scaling the TON blockchain past area of interest Telegram integrations, have largely taken a “wait and see” strategy. Retail traders additionally stay cautious.

“The basics of TON stay sturdy and unfettered: integration with Telegram, privacy-first strategy,” Younger stated, including:

“Till there’s additional readability on Durov’s case, TON’s adoption and worth are prone to stay constrained…”

CEX.io alternate’s Otyechnko stated whereas the arrest deepened the decline within the worth of Toncoin, the larger subject lies in ecosystem improvement — whether or not the builders can construct sustainable apps aside from video games and airdrops.

“TON’s spine stays steady, however its user-facing layer is fragile. With out new progress drivers, the community dangers stagnation regardless of its resilience on the protocol stage.”

For Durov, the case is about extra than simply private freedom or market sentiment. It’s about precept. “The one final result of my arrest up to now has been large harm to France’s picture as a free nation,” he wrote on his Telegram channel.

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