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The recent controversy surrounding Telegram CEO Pavel Durov is raising alarms within the cryptocurrency community, with some experts suggesting it could be a ‘black swan event’—an unforeseen incident with potentially catastrophic effects.
Here’s a breakdown of the situation and its impact on the crypto market.
Durov’s Legal Trouble Mounts
Pavel Durov is facing multiple legal challenges across Europe, which could significantly impact the cryptocurrency sector. In France, Durov has been indicted and barred from leaving the country according to the Bloomberg report. He faces allegations related to criminal activities on Telegram, though he has been released on a €5 million bail, with stringent reporting requirements. In response to the controversy, David-Olivier Kaminski, the lawyer of Pavel Durov, described the charges against Durov as ‘nonsense’.
In addition to the French charges, Durov is under investigation in India for potential criminal misuse of the messaging platform. The European Union is also scrutinizing Telegram for alleged breaches of the Digital Services Act (DSA), particularly concerning underreported user numbers. On top of this, Durov faces an unrelated criminal complaint in Switzerland regarding child abuse, filed by his former partner, which adds another layer of controversy.
Investors on Edge
This legal storm is hitting crypto venture capital firms hard, especially those heavily invested in Toncoin, which is linked to Telegram’s blockchain network. Pantera Capital, Animoca Brands, and Mirana Ventures have all poured millions into the 10th largest cryptocurrency Toncoin, betting on Telegram’s success. But with Durov in hot water, that bet is looking riskier by the day.
Still, CoinFund managing partner Alex Felix doesn’t regret investing in TON. Another Toncoin investor, Ryze Labs founder and CEO Matthew Graham, is also bullish on Toncoin. Even though the token has plummeted 15% to $5.58 in the last 7 days.
On the flip side, Lasse Clausen, a founding partner at 1kx, a crypto VC firm, is sounding the alarm. He’s calling this situation a potential “Black Swan event”—something unpredictable that could lead to market chaos. However, investors were counting on Telegram to boost Toncoin’s adoption, but with Durov’s future uncertain, many are starting to question whether that will happen.
What This Means for Crypto
Despite recent legal troubles for Telegram CEO Pavel Durov, it’s crucial to distinguish between Telegram and Toncoin, the cryptocurrency associated with Telegram. After a 2020 settlement with the SEC, Toncoin is largely independent of Telegram. Experts, including Shauli Rejwan of Masterkey VC, believe Toncoin can distance itself from Telegram’s issues and continue to grow.
Meanwhile, Durov faces serious legal constraints in France, with bail set at $5.5 million. On the market front, despite the crash alert, many crypto assets have shown resilience. Bitcoin has seen a modest increase of 0.8%, trading at $59,676, while Ethereum has surged by 3.8%, now priced at $2,553.
This shows that while Telegram suffers issues, the crypto industry, including Toncoin, remains stable.