Telegram-Linked Token TON Loses $2.7 Billion Following CEO's Pavel Durov Detention
APRNEWS — The recent detention of Pavel Durov, co-founder of Telegram Messenger LLP, has sent shockwaves through the cryptocurrency market, particularly affecting Toncoin, the token of The Open Network (TON). This blockchain project, closely linked to Telegram, has seen its market value plummet by approximately $2.7 billion, underscoring the vulnerability of digital assets tied to high-profile figures and companies.
Impact on Toncoin and the Crypto Market
Toncoin, which has become one of the most talked-about cryptoassets, experienced a sharp decline of over 20% after news broke that Durov was detained at a Paris airport. The reason for his detention was reportedly related to suspicions that Telegram had not taken sufficient measures to prevent criminal activities on its platform. Although Toncoin managed to recover slightly, trading at $5.58 as of Monday afternoon in London, the token remains down by over 16%, reflecting the market's uncertainty.
The Open Network, or TON, is a blockchain project that has garnered significant attention due to its partnership with Telegram, which boasts over 900 million monthly users. This partnership has fueled speculation that Telegram might evolve into a "super-app," similar to China's WeChat. The potential to integrate services like in-app payments and games into Telegram through TON has been a major draw for investors, including Investment management firms like Pantera Capital Management LP, which labeled their purchase of Toncoin as the firm's largest-ever Investment.
Venture Backing and Market Sentiment
Despite TON's success, the current turmoil raises questions about the future of the project. Although the foundation behind TON claims to be independent of Telegram, the close association between the two has been instrumental in driving its popularity. With Durov's detention, there is growing concern about the impact on Telegram's long-term prospects and, by extension, the value of Toncoin.
Richard Galvin, co-founder of hedge fund DACM, which acquired TON tokens in a private round in early 2023, commented that it is "too early to tell" what the long-term effects will be on Telegram. However, he noted that the market's reaction over the weekend "factored this uncertainty into the TON price." Galvin emphasized that the primary appeal of the TON-Telegram relationship is the potential to introduce Telegram's vast user base to crypto functionality. Anything that weakens Telegram's competitive position could have negative repercussions for TON.
Debate on Free Speech and Regulatory Scrutiny
Telegram's approach to content moderation has been a topic of intense debate. While some governments have criticized the platform for being too lenient and enabling criminal activity, free-speech advocates argue that Telegram provides a necessary space for open discussion. The platform is particularly popular within the cryptocurrency community, where it serves as a hub for sharing Investment tips and strategies.
The uncertainty surrounding Telegram's future could have far-reaching consequences. Stephany Zoo, head of ecosystem at market maker Caladan, noted that while other platforms like Discord, Signal, and X are used for group communications, the crypto community has a "disproportionate dependency on Telegram." Should Telegram face significant disruption, the ripple effects would likely be felt across the entire crypto ecosystem.
In response to Durov's detention, the official TON social media account expressed support by joining the hashtags #FreePavel and #FREEDUROV. The account also changed its logo to the "Resistance Dog," a symbol used to show solidarity with Durov.
The TON blockchain had seen a significant surge in activity earlier this year, with the value of assets locked on the network reaching a peak of $1.1 billion. However, that figure has since retreated to $667 million, according to data from DefiLlama. Despite the recent turmoil, Toncoin's price has more than tripled over the past year, and the token currently holds a market value of approximately $14.4 billion, according to CoinGecko.
This unfolding situation highlights the interconnectedness of Financial services and cryptocurrency markets with global political and legal developments. The impact of Durov's detention on both Telegram and TON will be closely watched by Investment management firms, Financial institutions, and investors alike as they assess the risks and opportunities in this rapidly evolving landscape.
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