A review of the rise and fall of Telegram: Will the law become a key factor in reshaping the app?

Original Title: 《The Rise and Fall of Telegram》

Author: M6 Labs

Compiled by: Shenchao TechFlow

The story of Telegram is a modern legend, telling of resistance, innovation, and ultimately a touch of hubris. Founded by the vision of Pavel Durov, Telegram became a bastion of free expression and privacy protection. In an era of increasing government surveillance, the Durov brothers built a censorship-resistant encrypted messaging platform that served millions of users worldwide.

Telegram's steadfast commitment to privacy quickly attracted users disillusioned with mainstream platforms and wary of government intervention.

However, almost like a Shakespearean tragedy, Telegram's firm stance on privacy ultimately led to its predicament. The platform's refusal to comply with data requests and its association with some controversial activities made it a focal point in the global debate over the boundaries of freedom, security, and digital privacy.

The arrest of Pavel Durov in 2024 brought significant attention to Telegram's activities. Although Durov is no longer imprisoned, the circumstances surrounding his arrest plunged the platform into legal and ethical controversies, challenging its fundamental principles and future development.

Early History of VKontakte

Pavel Durov and his brother Nikolai Durov founded VKontakte (VK) in 2006, which quickly became the most popular social networking platform in Russia, akin to Facebook in the West, offering social interaction, content sharing, and community building features.

During his management of VK, Durov became known for his commitment to free speech and resistance to government interference. This philosophy often put him at odds with Russian authorities, especially during politically sensitive times such as the 2013-2014 Maidan Revolution in Ukraine. Durov refused to hand over user data related to Ukrainian activists, leading to increasing pressure from the Kremlin, and ultimately, in 2014, he was forced to leave VK and went into exile.

These experiences paved the way for the creation of Telegram. Unlike VK, Telegram was designed as a privacy-focused encrypted messaging platform, allowing users to communicate without fear of being monitored. It employed robust encryption technology and promised to remain free from government control, making it particularly appealing to users who valued security and free speech.

Telegram's Development into a Global Platform

Telegram steadily grew in its early years, gradually becoming an alternative to mainstream apps like WhatsApp and Facebook Messenger. It stood out by offering unique features such as large group chats, broadcast channels, and the ability to send large files. Telegram's open-source nature also allowed developers to create bots and games on the platform, further enhancing its appeal.

By the mid-2010s, Telegram's growth accelerated significantly. As concerns about online privacy increased, and Edward Snowden's revelations about government surveillance programs came to light, the global demand for privacy surged.

Telegram attracted millions of users worldwide due to its commitment to privacy and user-friendly interface.

Currently, Telegram's monthly active user count is nearing one billion.

Embracing the Cryptocurrency Community

As cryptocurrencies gained popularity, Telegram became one of the core platforms for this trend. It emerged as an important platform for the crypto community, especially in terms of initial coin offerings (ICOs), token trading, and project discussion forums. Due to its simple operation and privacy features, Telegram became a favorite among cryptocurrency enthusiasts and traders.

Recognizing the rapid growth of its user base, Telegram began to venture into blockchain technology, developing the Telegram Open Network (TON). In 2018, Telegram raised up to $1.7 billion through an ICO to develop the TON blockchain and its associated cryptocurrency, Gram. The goal was to create a decentralized platform that supported secure, fast transactions and allowed for the development of decentralized applications (dApps) and services on its network.

Despite the enormous potential of the TON blockchain, Telegram's bold attempts in the cryptocurrency space faced regulatory challenges.

In 2019, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Telegram, accusing the sale of Gram tokens of being an unregistered securities offering. In 2020, Telegram agreed to return $1.2 billion to investors and abandoned the TON project, thereby scaling back its plans in the crypto space.

Although Telegram ceased its direct involvement in the TON blockchain project, it remained a major communication platform for the crypto community. Projects and developers continued to use the platform to communicate, discuss new tokens, and organize events.

Telegram's 2023 financial report showed that despite an operational loss of $108 million, over 40% of its $342.5 million revenue came from crypto-related activities.

Telegram in 2024

Before Durov's arrest, Telegram was performing quite well in 2024. Firstly, TON was one of the best-performing cryptocurrencies of the year.

From January 1, 2024, to June 15, 2024, the price of TON skyrocketed from $2.27 to $8.17, with its market capitalization nearly quadrupling.

Since its launch in 2023, the popularity of Telegram Mini Apps has rapidly increased due to their integration with the TON blockchain. These web applications run directly within the Telegram app, allowing developers to create complex decentralized applications using familiar web programming languages.

Telegram's vast user base, combined with the high scalability and low transaction fees of the TON blockchain, led to its rapid acceptance by users, attracting millions.

The Beginning of the End: Government Demands for User Data

As Telegram gained popularity, its negative reputation also rose. Governments in various countries began to view Telegram as a potential threat due to its refusal to provide user data. Several countries, including Russia, Iran, and China, attempted to block or censor Telegram, claiming that the platform was being used by political dissidents.

Governments argued that access to encrypted communications was crucial for combating terrorism, money laundering, and criminal activities, while privacy advocates contended that government backdoors would undermine civil liberties and could foster authoritarian regimes.

The most intense confrontation occurred in Russia, where authorities demanded access to encrypted user data to monitor illegal activities and potential terrorism. Durov refused to cooperate, leading to Telegram being banned in Russia in 2018.

Government pressure was not limited to Russia:

• In 2022, the German government fined Telegram €5 million for failing to comply with laws regarding illegal content.

• In France, the company faced legal challenges related to issues of extremism and the dissemination of illegal content.

Of course, as the saying goes, where there’s smoke, there’s fire.

Due to the platform's limited moderation policies, extremist groups and illegal activities flourished. Telegram was used to coordinate terrorist attacks, drug trafficking, and the distribution of child exploitation content, drawing the attention of law enforcement agencies worldwide.

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Pavel Durov's Arrest

The regulatory and legal issues facing Telegram reached a peak in August 2024 when Pavel Durov was arrested upon arriving in Paris from Azerbaijan. French authorities accused Durov of refusing to provide data related to financial crimes, drug trafficking, and the dissemination of child exploitation materials on Telegram, leading to his detention.

Durov's arrest sparked a diplomatic dispute between France, the UAE, and Russia. After four days of questioning, he was released on a €5 million bail but was prohibited from leaving France and required to report regularly to the police.

This incident ignited intense discussions about free speech, privacy, and state surveillance, with figures like Elon Musk and Edward Snowden criticizing the arrest as an attack on free expression.

Regardless, Durov's arrest directly led to a significant drop in the price of TON.

In just three days, TON fell from $6.75 to $5.11.

The Legacy of Telegram

Telegram's legacy lies in its dual role as a protector of privacy and a focal point of controversy. It provided a secure platform for users seeking to escape censorship, while also facing legal and ethical challenges that threaten its existence and reputation.

Interestingly, Durov's case sets a potentially far-reaching precedent for other tech companies and social media platforms. This may prompt a reevaluation of platform moderation policies, data-sharing practices, and compliance with international laws.