Will Telegram’s Legal Issues Cause Another Crypto Market Crash?
The recent controversy surrounding Telegram CEO Pavel Durov is raising alarms in the cryptocurrency community, with some experts suggesting that this could be a ‘black swan event' – a potential risk of unforeseen events.
Here is a detailed description of the situation and its impact on the crypto market.
Durov's legal problems mount
Pavel Durov is facing several legal challenges across Europe, which could seriously affect the cryptocurrency sector. In France, Durov has been charged and banned from leaving the country, Bloomberg reports. He faces charges related to criminal activities at Telegram, despite strict reporting requirements and was released on bail of 5 million euros. In response to the controversy, Pavel Durov's lawyer, David-Olivier Kaminsky, described the charges against Durov as ‘absurd'.
In addition to the French charges, Durov is also under investigation in India for alleged misuse of the messaging platform. The European Union is investigating Telegram for violations of the Digital Services Act (DSA), particularly regarding under-reported numbers of users. On top of that, Durov faces an unrelated criminal complaint in Switzerland for child abuse filed by his ex-partner, which adds another layer of controversy.
Investors on the edge
This legal storm is hitting the crypto venture capital companies that are connected to Telegram's blockchain network, especially those that have invested heavily in Toncoin. Pantera Capital, Animoka Brands and Mirana Ventures have invested millions in Toncoin, the 10th largest cryptocurrency, betting on Telegram's success. But with Durov in hot water, that bet looks riskier by the day.
Still, CoinFund managing partner Alex Felix doesn't regret investing in Tons. Another Toncoin investor, Matthew Graham, founder and CEO of Ryze Labs, is also bullish on Toncoin. Although the token has fallen 15% to $5.58 in the last 7 days.
On the flip side, Lasse Clausen, founding partner of 1kx, a crypto VC firm, is sounding the alarm. He's calling this a “black swan event”—an unknown event that could lead to market chaos. However, investors were counting on Telegram to boost Toncoin adoption, but with Durov's future uncertain, many are beginning to question whether that will happen.
What does this mean for Crypto?
Despite the recent legal troubles with Telegram CEO Pavel Durov, it is important to distinguish the Telegram-related cryptocurrency between Telegram and Toncoin. After the 2020 settlement with the SEC, Toncoin is largely exempt from Telegram. Experts, including Masterkey VC Shauli Rejwan, believe Toncoin will continue to distance itself from Telegram's issues and continue to grow.
Durov, meanwhile, is set on $5.5 million bail and faces severe legal restrictions in France. In front of the market, despite the crash warning, many crypto assets have shown strength. Bitcoin is up a modest 0.8% to trade at $59,676, while Ethereum is up 3.8%, now trading at $2,553.
This shows that while Telegram is facing problems, the crypto industry including Toncoin is stable.
