After Telegram CEO Arrest, TON Investors Say They Aren't Bailing on the Cryptocurrency

Toncoin may be down, but some crypto venture capitalists say they aren't bailing on the tenth largest cryptocurrency in the world.

Some venture capitalists are still bullish on Toncoin, the tenth largest cryptocurrency in the world, despite the recent arrest of Pavel Durov, the CEO of popular messaging app Telegram, which has historical ties to the cryptocurrency.

Following Durov’s arrest by French authorities, the price of Toncoin has tanked. Over the past seven days, the price of one token has dropped almost 15% to now trade around $5.58.

However, Alex Felix, managing partner at CoinFund, which led a $250 million funding round for TON (ticker TON), doesn’t regret his venture firm’s investment in the cryptocurrency.

“The fundamental case for TON remains compelling,” Felix told DL News.

CoinFund is among the investors in a group of Web3 startups that includes Dapper Labs, the maker of NBA Top Shot, and Alchemy Pay, a crypto gateway for fiat currencies.

Ryze Labs, another VC that invested in Toncoin, also remained upbeat despite Durov’s arrest.

“Although we agree the news of Pavel’s arrest is quite significant, so is the fact that, this week, TON accounts crossed the 50 million mark for the first time,” Matthew Graham, founder and CEO of Ryze Labs, told DL News, in reference to the number of individual addresses on the TON blockchain.

“The narrative around the technology and community remains strong, and we believe there is still a lot of potential for growth,” he added.

And Joven Wu, head of business development at Ryze Labs, said in a recent blog post that Durov’s arrest may have a silver lining for the cryptocurrency.

“The controversy has significantly raised TON’s profile, potentially attracting more users and developers to the ecosystem,” Wu wrote.

“The news has also spurred the community to rally behind the cryptocurrency, further strengthening its bonds and increasing awareness of TON among the masses.”

The three crypto VCs to whom DL News spoke also cautioned that Telegram, the app, should not be conflated with Toncoin, a cryptocurrency that became nominally separate from Telegram after a settlement with the US Securities and Exchange Commission in 2020.

“It’s important to note that the concerns appear to be more about regional compliance issues, such as content moderation, affecting traditional technology companies rather than the crypto platform itself,” Felix said, in reference to Durov’s arrest.

“The regulatory focus on Telegram stems from its vast user base and the role it plays in content distribution within the country, which has led to legal clashes over banned content and encryption,” he added.

And Shauli Rejwan, managing partner at Masterkey VC and early investor in Toncoin, believes that, despite the news of Durov’s arrest, the token may one day be able to more fully distance itself from its association with Telegram.

“History has shown that strong projects can outgrow their initial associations, and TON, with its current trajectory, is well-positioned to do so,” Rejwan told DL News.

“The community, development, and use cases will ultimately define the project, and while the Telegram connection was certainly an important chapter, it’s just one part of the story.”

A French prosecutor said on Wednesday that Durov is under formal investigation and will not be allowed to leave the country, according to the BBC. He will have to report to the police twice a week and his bail is set to $5.5 million.

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