Toncoin, the cryptocurrency associated with The Open Network (TON) and linked to Telegram Messenger LLP, has experienced a significant market value loss of approximately $2.7 billion. This sharp decline comes in the wake of the detention of Pavel Durov, Telegram’s co-founder, who was reportedly taken into custody at a Paris airport on Saturday. The arrest is related to allegations that Durov failed to take measures to prevent criminal use of Telegram.
Market Impact and Recovery
The 10th largest cryptocurrency by market cap saw its value drop by more than 20% following the news. As of 7:25 a.m. Monday in London, Toncoin’s price had stabilized at $5.67, although it remains over 16% down from previous levels. The volatile market reaction highlights the impact of the uncertainty surrounding Durov’s legal situation on the token’s value.
TON’s Vision and Market Backing
The Open Network, or TON, is designed to leverage Telegram’s vast user base, which exceeds 900 million monthly users. The blockchain project aims to integrate services like in-app payments and games, positioning itself as a potential “super-app” akin to China’s WeChat. Despite the separation claimed by the foundation, the connection to Telegram has significantly increased TON’s visibility and market hype. Pantera Capital Management LP, for instance, highlighted its purchase of Toncoin as its largest-ever investment in May.
Detention’s Impact on Telegram and TON
Durov’s detention has cast a shadow of uncertainty over Telegram and its associated projects. While Telegram, based in Dubai, has stated its compliance with European laws and maintained Durov’s innocence, the market’s response reflects concerns about the potential long-term effects on Telegram’s business and its associated crypto ventures. Richard Galvin, co-founder of DACM, noted that while it is too early to assess the full impact, the current market reaction already reflects the heightened uncertainty. The critical aspect of the TON-Telegram relationship remains the potential to introduce Telegram’s extensive user base to cryptocurrency functionality.
Ongoing Debate
Telegram has faced criticism for its lenient content moderation, which some argue fosters criminal activity. Conversely, it is also lauded by free-speech advocates for its role in promoting open discussion. The current situation underscores the delicate balance Telegram must maintain as it navigates these challenges.
