Telegram co-founder and CEO Pavel Durov’s arrest in France on Aug. 24 had an immediate impact on the crypto industry as Toncoin’s value sharply dropped following the news.
But his arrest could have wider implications for the crypto industry, which heavily relies on the Telegram messaging app.
“With the arrest of Telegram founder Pavel Durov over the weekend, the French authorities risk positioning themselves as an enemy of free speech and decentralization — the core values of the Web3 ecosystem,” Tim Kravchunovsky, CEO of the decentralized telecommunications network Chirp, told Cointelegraph:
“It would be a crying shame if a society that is meant to be democratic positions itself as the enemy of these core values.”
Telegram has become the go-to platform for the crypto community. Many crypto projects launch their communities on Telegram first, establishing a familiar environment where enthusiasts can easily discover and engage with new projects.
Durov’s arrest has raised calls and fears about government overreach and the potential crackdown on privacy-oriented technologies that are often essential for crypto operations.
Telegram is known for its resistance to government censorship. Although not fully decentralized, its stance on privacy and freedom of speech resonates with the crypto community.
Related: Telegram founder Pavel Durov arrested — What we know so far
Notably, in 2018, Russian media regulator Roskomnadzor demanded that Telegram grant access to encrypted user messages to help monitor potential threats under the 2016 “Yarovaya Law,” an anti-terrorism measure.
Durov refused to comply, citing his commitment to user privacy and the technical impossibility of decrypting end-to-end encrypted messages. This refusal led to Durov’s exile and a ban on the app, but the ban proved largely ineffective, as Russian users continued accessing Telegram through alternative methods.
Currently, the messenger’s founder has been under arrest for three days. French law enforcement has extended his detention until August 28. He being questioned regarding 12 criminal charges against an unidentified person.
Concerns over Telegram’s encryption practices
Telegram offers an end-to-end encryption option, which means message content is only accessible to the sender and the recipient.
However, contrary to popular belief, this is not a default setting and must be manually enabled as “secret chats.”
Otherwise, Telegram’s private messages and group chats actually use server-client encryption. This means that while messages are encrypted during transit, they are stored on Telegram’s servers.
In theory, the company can access this data, and there is a risk that authorities could potentially compel them to hand it over.
Cryptographer and John Hopkins University professor Matthew Green criticized Telegram’s end-to-end encryption option as being “oddly difficult” for non-experts to turn on. It requires four clicks to do so.
“While it might seem like I’m being picky, the difference in adoption between default end-to-end encryption and this experience is likely very significant,” Green wrote in an Aug. 25 blog post.
Crypto industry participants like Mikko Ohtamaa, co-founder of algorithmic investment protocol Trading Strategy, have hailed Signal as the “best” encrypted messaging alternative to Telegram.
The Russian government similarly banned Signal for allegedly violating laws that require the messenger to prevent the use of its platform for terrorist purposes.
Surveillance and censorship increase?
French authorities arrested Durov over allegations that Telegram is used for criminal activities such as drug trafficking, terrorism promotion and child pornography, according to French media.
Reuben Kirkham, co-director of the Free Speech Union of Australia, told Cointelegraph that Durov's arrest signals a global crackdown on online moderation and has implications for free speech.
“We find this most concerning,” he said.
“Arrests of leaders in technology companies should not be being used to violate individual privacy rights. Privacy and free speech are often seen as both sides of the same coin. It risks a chilling effect among platform users, who expect their communications to be confidential, without any loopholes or back doors.”
Durov’s arrest has already sent shockwaves through the tech community, raising immediate concerns among industry leaders.
Chris Pavlovski, the Canadian founder and CEO of video sharing platform Rumble, announced his departure from Europe following Durov’s arrest.
Earlier, in November 2022, Rumble had restricted access to users in France, claiming that the French government had demanded the removal of “certain Russian news sources.”
The crypto community has witnessed the United States authorities arrest Silk Road founder Ross Ulbricht, Alexey Pertsev of Tornado Cash, and Samurai Wallet developers Keonne Rodriguez and William Hill.
These cases are often cited as broader examples of privacy and free speech violations, even in the US, where the First Amendment offers some protections for code as a form of free speech.
Is decentralization the alternative solution?
Various protocols offer users alternatives to centralized social media networks. However, these options have yet to convince the general public to move away from major centralized platforms like X, Instagram and Facebook.
Mastodon is one of the best-known examples. Its active user base exploded from under 400,000 to over 2.6 million following Elon Musk’s purchase of X in October 2022. However, users dropped below one million in February 2024.
Following Durov’s arrest, Stani Kulechov of decentralized finance platform Aave said there’s a need for a “resilient” social network that can protect users and their data from centralized governments and third parties.
Kulechov argued that blockchain is currently the best available technology to achieve resiliency, intentionally steering away from the term “decentralization,” which he describes as an “often misunderstood” concept that “rarely achieves consensus on its meaning.”
Ohtamaa suggested that while blockchain is part of the solution, it is not a one-size-fits-all answer to the issue.
“Some EU countries have made clear they are willing to jail software developers, so even if it is possible to build this, unless you become Satoshi and die, you are likely to spend your days in jail on the charges of helping terrorists and pedophiles,” Ohtamaa said.
Should Telegram users be concerned?
Durov’s arrest and the resulting concerns from tech leaders underscore a growing global conflict: on one side, governments are increasingly looking to regulate online platforms, while on the other, communities continue to advocate for privacy, free speech and decentralized technology.
But Kirkham of Australia’s Free Speech Union said that Durov’s arrest should raise concerns for users of messaging apps whose leaders are not arrested.
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“If anything, people should even be worried about platforms where their leaders are not being arrested, as they will likely just be quietly doing what the government wishes,” he said.
As for access to the application, Ohtamaa believes users shouldn’t have immediate concerns.
“It is unlikely France, Durov, or anyone can shut down Telegram, as the platform has been strengthened by a decade of being a constant target of spies and hacking attempts,” Ohtamaa said.
Indeed, the arrest of Pavel Durov made Telegram the most downloaded app in France.
According to data from Appfigures, Telegram has risen to the top of the French marketplace in the “Social Networks” category and has become the third most popular app in the country overall (including games and other utilities). The total number of downloads of the messenger worldwide has increased by 4%. In the United States, Telegram climbed 10 positions, ranking eighth in overall popularity and second in the “Social Networks” category. These are the highest numbers for Telegram since the beginning of 2023.