Toncoin Loses $2.7 Billion in Market Value After Telegram Co-Founder Detained

The token of The Open Network, or TON, slid more than 20% after Pavel Durov was reportedly taken into custody at a Paris airport.

A digital asset linked to Telegram Messenger encountered a market value decline of around $2.7 billion amid news regarding the detention of the messaging app's co-founder.

Toncoin, the token associated with The Open Network, experienced a drop of over 20% following reports on Saturday that Telegram co-founder Pavel Durov was detained at a Paris airport over allegations of failing to take measures to prevent criminal use of Telegram.

The 10th largest cryptoasset recovered slightly from the initial drop, trading at $5.69 as of 10:36 a.m. Monday in Singapore, still down 16% as a result of the unfolding drama, according to data compiled by Bloomberg.

The Open Network, also known as TON, blockchain has access to Telegram’s 900 million monthly users via a partnership and aims to enable services like in-app payments and games. This led to speculation that Telegram could potentially become a “super-app” in the style of Chinese giants like WeChat.

Venture BackingThe three-year-old foundation behind the project claims to be separate from Telegram. However, the ties between the two entities made TON one of crypto's most-hyped initiatives. Pantera Capital announced in May that its purchase of Toncoin was its largest-ever investment to date.

Durov, a billionaire, also serves as Telegram's chief executive. The Dubai-based company stated in a statement that it complies with European laws, including the Digital Services Act, and that Durov has "nothing to hide."

According to Richard Galvin, co-founder of hedge fund DACM, which purchased TON tokens in a private round in early 2023, it's still “too early to tell” how Durov’s detention will impact Telegram in the long run. However, he noted that the weekend market reaction “factored this uncertainty into the TON price” for now.

According to Galvin, the main attraction of the TON-Telegram relationship “is the ability to introduce Telegram's vast user base to crypto functionality,” and “anything that weakens the competitive position of Telegram is negative for TON.”

Governments have criticized Telegram's relatively hands-off approach to content moderation for facilitating criminality, while proponents of free speech praise the platform for enabling open discussion. For instance, Telegram is used by the crypto community to share investment tips.

On its X social-media account, TON joined the likes of Elon Musk in expressing support for Durov, with the platform's logo changing to the “Resistance Dog” and the hashtags #FreePavel and #FREEDUROV being reposted in a further show of solidarity.

The value of assets locked on the TON blockchain soared this year to a peak of $1.1 billion last month, but the figure has now dropped to $661 million, according to DefiLlama. Toncoin's price has more than tripled in the past year, with the token currently having a market value of about $14.4 billion, according to CoinGecko.

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