Toncoin, a cryptocurrency linked to Telegram, loses $3.5 billion in market value following the detention of Telegram’s founder, Pavel Durov, casting uncertainty over the future of the project.
Introduction: Toncoin, the digital asset connected to Telegram’s blockchain project, has seen a sharp decline in value after the detention of the app’s co-founder, raising concerns about the future of the highly anticipated initiative
A digital asset tied to a blockchain project associated with Telegram Messenger has seen its market value plunge by $3.5 billion, reflecting the turmoil sparked by the recent detention of the messaging app’s billionaire co-founder, Pavel Durov.
Toncoin, the cryptocurrency of The Open Network (TON), experienced a steep decline of more than 20% following the news that Durov was detained at a Paris airport on August 24. The detention was reportedly due to suspicions that Durov failed to take adequate measures to prevent criminal use of Telegram, a platform widely recognized for its minimal content moderation policies.
By August 26, Toncoin had recovered slightly but was still down 16%, trading at $5.69 in Singapore at 10:36 am. The drop has cast a shadow over one of the most hyped crypto projects in recent years, with Toncoin previously experiencing a significant rise, driven by speculation that Telegram could evolve into a “super app” akin to China’s WeChat.
The TON blockchain, which benefits from its partnership with Telegram and access to its 900 million monthly users, aims to integrate services like in-app payments and gaming into the messaging app. This integration fueled optimism that Telegram could significantly expand its functionality and market presence, making it a major player in the digital economy.
However, the recent detention of Durov has thrown these ambitions into doubt. The total value of assets locked on the TON blockchain, which peaked at $1.1 billion in July 2024, has now fallen to $661 million, according to data from DefiLlama. Despite its current market value of around $14.4 billion, Toncoin’s sharp decline underscores the uncertainty surrounding the future of the project.
The Open Network Foundation, which oversees the TON blockchain, maintains that it operates independently of Telegram. However, the strong association between the two has been a key factor in the heightened interest and investment in Toncoin. In May, Pantera Capital Management described its purchase of Toncoin as the firm’s largest-ever investment, highlighting the high stakes involved.
Richard Galvin, co-founder of hedge fund DACM, which invested in TON tokens during a private round in early 2023, noted that it is “too early to tell” what long-term impact Durov’s detention might have on Telegram and its associated projects. He acknowledged that the market reaction over the weekend has already “factored this uncertainty into the TON price,” but the situation remains fluid.
Galvin emphasized that the primary appeal of the TON-Telegram relationship lies in the potential to introduce Telegram’s vast user base to cryptocurrency functionalities. He warned that “anything that weakens the competitive position of Telegram is negative for TON.”
In response to the unfolding events, Telegram issued a statement affirming its compliance with European laws, including the Digital Services Act, and insisting that Durov has “nothing to hide.” This statement comes amidst ongoing criticism from governments who argue that Telegram’s light-touch approach to content moderation facilitates criminal activities. On the other hand, proponents of free speech have lauded the platform as a critical space for open dialogue.
The Open Network has shown solidarity with Durov during this challenging time. TON’s social media account on X joined figures like Elon Musk in supporting the Telegram founder, reposting hashtags such as #FreePavel and #FreeDurov. In a further display of backing, TON even changed its logo to the “Resistance Dog,” symbolizing its support for Durov.
As the situation develops, the crypto community and investors alike are closely monitoring the potential ramifications for both Toncoin and Telegram. The outcome could significantly impact not just these entities but also the broader landscape of digital currencies and blockchain technology.
