Telegram CEO's Arrest Is Unlikely to Be the Last: Galaxy

Telegram CEO’s Arrest Is Unlikely to Be the Last: Galaxy

The first major arrest of a prominent messaging or social media company CEO may not be the last, Galaxy said.

Telegram and Durov were probably resisting takedown or information requests, the report said.

Some of the charges could be linked to Telegram’s integration with TON or the blockchain’s presumed use in illegal activity, Galaxy said.

The detention of Telegram CEO Pavel Durov in France is the first major arrest of a prominent messaging or social-media company boss for failing to sufficiently police its platform. It is unlikely to be the last, Galaxy Research said in a report on Monday.

Governments have been hostile to cryptography and encryption for some time, the report noted after Durov was held over the weekend.

Telegram and Durov were likely resisting takedown or information requests from Europe or, more specifically, the French government, Galaxy said. Telegram is closely linked with The Open Network, or TON, blockchain, which was originally an internal project at the platform before being discontinued and taken up by independent developers.

“The extent to which the charges against Pavel involve TON, or Telegram’s integrations with TON, is not known,” wrote Alex Thorn, head of firmwide research at Galaxy.

TON is also the native crypto token of the TON blockchain, formerly known as the Telegram Open Network. The cryptocurrency fell over 14% following French media reports of Durov’s arrest at Le Bourget Airport.

“It is possible that some of the ‘fraud’ or ‘money laundering’ charges could resolve around Telegram’s integration with TON and/or TON’s use in illegal activity,” Thorn wrote.

TON, the blockchain, has more than 350 validators globally, but it is unclear how many of these Telegram operates, if any, the report said. Therefore, it’s not clear “how resilient TON can be in the case that France or any other major governments attempt to attack it or to take it down as part of Durov’s arrest.”

Galaxy noted that TON’s value is substantially dependent on its integration with the messaging app.

How TON can avoid being involved with Durov and Telegram, or how other blockchains can avoid being targeted for aiding criminality, will likely depend on how decentralized they are, the report added.

Durov could be freed as soon as Wednesday according to French prosecutors. However, betting platform Polymarket isn’t confident he will be released this month, with participants putting money on a release before the end of September.

Edited by Sheldon Reback.