With Founder Arrested, Can TON Chain Turn Danger into Safety?

2024-08-28, 07:48

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![](https://gimg2.gateimg.com/image/article/17248311201690791857hotspot.jpeg)
## [TL；DR]: 
According to French media reports on August 25, Pavel Durov, founder and CEO of Telegram, was arrested at Paris Bourget Airport on suspicion of 12 crimes.

After the news broke, it quickly triggered market panic and strong risk aversion. The TON coin price fell to a low of $5.246 in a short period of time, with a maximum drop of nearly 23% in 24H. TVL fell from $508M to a low of $325M.

The TON ecosystem is expected to alleviate this negative impact by leveraging its independence from Telegram in legal operations, as well as its decentralized nature and independent development path.

## Introduction
The recent news of Pavel Durov, the founder and CEO of Telegram, being arrested in France was like a bolt from the blue, quickly causing a huge shock in the cryptocurrency community, especially the TON public chain closely related to Telegram, whose price suffered a heavy blow and plummeted significantly.

This article will analyze the ins and outs of the incident and explore its subsequent impact on the TON ecosystem.
 
## Founder Arrested, Facing Multiple Criminal Charges
On August 24, Pavel Durov, founder and CEO of Telegram, was arrested at Paris Bourget Airport on charges of conspiring with illegal activities.

The French prosecutor's office, which detained Durov, stated that Durov is accused of twelve crimes including conspiring with illegal activities, refusing to provide information to authorities, money laundering, association with criminal gangs, and providing encryption services without declaration.
 ![](https://gimg2.gateimg.com/image/article/17248311791.jpg)
Source: public information
 
 Specifically, the investigation into child sexual exploitation has prompted the French OFMIN agency to issue a search warrant for Durov. TF1 TV speculates he will face multiple charges, including terrorism, drug trafficking, conspiracy to commit crimes, fraud, money laundering, and possibly more. Considering his dual nationality, he may face up to twenty years in prison.
 
Particularly noteworthy is the view put forward by Yekaterina Mizulina, the head of the Russian Internet Security Alliance, who believes that behind Durov's arrest may be hidden pressure from the United States, aimed at attacking the super currency <a href="/price/toncoin-ton" target="_blank" class="blog_inner_link">Toncoin</a> (TON) circulating on Telegram, so as to continue the sanctions policy of the Securities and Exchange Commission (SEC) against TON. Meanwhile, French President Macron stated that Durov's arrest in the judicial investigation did not involve any political motives.

The statements of various countries undoubtedly add more political and economic complexity to the event.

After the news broke, although TON issued a statement to "assure everyone that the TON community remains strong and fully operational," it still could not stop the market panic. The TON coin price fell to a low of $5.246 in a short period of time with a maximum drop of over 23% in 24H. TVL dropped from $508M to a low of $325M.

As of the writing date, the coin price has rebounded slightly and stabilized and fluctuated around $5.41.
 ![](https://gimg2.gateimg.com/image/article/17248312052.jpg)
Source: Gate.io
 
## With Multiple Regulatory Crackdowns, is TON the Next “Tornado” or “BNB”?
Looking back at their past history, Durov and TON have been repeatedly hit by regulatory measures, causing market panic.

Durov resigned earlier and founded Telegram due to opposition to Russia's censorship of his early social media platform VK, leading to strained relations with the Russian government. In early 2018, Telegram officially launched a project called TON and successfully raised up to $1.2B from well-known investment institutions including Sequoia Capital, Benchmark, Kleiner Perkins, and Lightspeed through an initial coin offering (ICO) strategy.

However, by October 2019, within a month of the release of the TON project testnet code, the US Securities and Exchange Commission (SEC) determined that the financing of TON tokens was essentially equivalent to illegal and unregulated securities issuance activities. In response to this situation, the SEC quickly took action to prevent Telegram from selling these digital tokens in the US market. Stephanie Avakian, the joint head of its enforcement department, stated that this was to curb illegal sales.

As of May 2020, Pavel Durov, the founder of Telegram, made the decision to suspend the TON project and initiated the process of returning funds to investors, ultimately achieving a refund of approximately 72% of the funds, totaling $1.2B. Meanwhile, Telegram also paid a fine of $18.5 million to the SEC, but did not directly admit or deny the SEC's allegations during the process.
 ![](https://gimg2.gateimg.com/image/article/17248312373.jpg)
Source: SEC
 
Subsequently, Pavel Durov transferred control of the TON project to the community. Given the openness of the TON code, Toncoin (TON) was born, and the project received official recognition from Pavel Durov at the end of 2021.

Durov's recent conviction and arrest reminds us of similar cases in the past where he was subjected to regulatory crackdowns. After CZ settled with the US authorities for a high fine on money laundering charges, <a href="/price/bnb-bnb" target="_blank" class="blog_inner_link">BNB</a> recovered from its slump and resumed its upward trend; On the contrary, the privacy protection protocol Tornado Cash has been hit by US regulatory agencies for non-compliance, and various exchanges have also taken down the TORN token under pressure.

In fact, the Durov case is more complex than CZ, Ripple, and Tornado, so it remains to be seen which path TON, which is closely related to them, will take.

## After Going through Twists and Turns, TON Chain has Become More and More Resilient
After Durov's arrest, leading figures in the technology and media industries, such as Elon Musk and Tucker Carlson, spoke up for Durov and expressed their firm support.

This action resonated within the TON (Telegram Open Network) ecosystem. Several well-known projects such as DOGS, Hamster Network, TON Society, etc., have expressed their support for the continued development of the TON ecosystem, demonstrating the resilience and unity of the ecosystem.
 ![](https://gimg2.gateimg.com/image/article/17248312704.jpg)
Source: @ton_society
 
Subsequently, a support movement with the theme of "FreePavel" emerged in the cryptocurrency community, widely spread through channels such as X platform. Supporters gathered into an undeniable force through forwarding and support, demonstrating the cryptocurrency community's pursuit of freedom and justice.

Undoubtedly, Durov's arrest sends a stern signal to those who engage in illegal activities on the Telegram platform, and also reflects the determination of regulatory agencies to strengthen the supervision of communication applications. For example, the Indian government subsequently stated it is investigating Telegram's potential abuse in criminal activities, especially extortion and gambling. If the investigation results are unfavorable, the application may face the risk of being banned.

However, even though the Telegram platform faces the risk of user churn due to the arrest of its founder, the TON ecosystem is expected to mitigate this negative impact by leveraging its independence from Telegram in legal operations, as well as its decentralized nature and independent development path.  The latest news shows that Durov, may be released as early as Wednesday local time. Of course, if investigators discover sufficient evidence during the interrogation process, the release time will become uncontrollable.

Anyway, this event will stimulate public interest and attention to encrypted communication, decentralized finance, and society, promoting the development of the entire decentralized blockchain network field.

In short, although TON and the entire <a href="/price" target="_blank" class="blog_inner_link">crypto market</a> may be temporarily under pressure, in the long run, the deepening of the decentralized concept will become an inexhaustible driving force for the development of the industry. Just as similar events in the past are often accompanied by short-term market fluctuations and long-term reflections, the TON ecosystem is expected to demonstrate even more resilient vitality after this challenge.

<div class="blog-details-info">
<div>Author:**Carl Y.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>