Pavel Durov, the founder of Telegram, was detained outside Paris on August 24, raising concerns in the crypto venture capital sector. Durov’s arrest, tied to allegations of facilitating criminal activities on Telegram, has sparked a ripple effect, particularly about Toncoin, a digital token closely linked to the popular messaging app.
Venture capital firms like Pantera Capital, Animoca Brands, and Mirana Ventures are among the key investors in Toncoin, which has seen significant volatility since Durov’s detention, Bloomberg reported.
How was Toncoin Affected After Pavel’s Arrest?
Toncoin is at the heart of Telegram’s blockchain network, TON, which powers various services on the app, including instant payments. Earlier this year, Pantera Capital, one of the largest crypto venture capital firms, invested more than $100 million in Toncoin.
The investment was based on a vision that Telegram could evolve into a “super app,” similar to China’s WeChat, with its 900 million users driving Toncoin’s growth across payments, blockchain games, and more.
However, Durov’s arrest has brought attention to the dangers of making these investments. Durov is accused of not doing enough to stop crimes using Telegram, such as drug trafficking and the dissemination of child pornography. Since then, Telegram has declared that it abides by European legislation.
Toncoin’s value fell by 20% after Durov’s arrest, but it eventually made up for some losses. DefiLlama reports that the total value locked (TVL) on the TON blockchain has decreased to $573 million from its peak of over $1 billion earlier this year. TVL is a crucial indicator of a blockchain network’s health and utilisation.
As of today, the token has regained some bullish momentum, climbing 5% in the past 24 hours to trade at $5.60. However, the token remains down by more than 13% over the past week.
Tensions In The Crypto Venture Capital Sector for Telegram
Investors are worried about the arrest because they believe that Durov’s legal issues could make people stop using Telegram, which has long been regarded as a haven for the cryptocurrency community because of its lax monitoring.
According to Lasse Clausen, the founder partner of the cryptocurrency venture capital firm 1kx, the circumstances may make people wonder what the future holds for Toncoin.
According to Clausen, “the majority of investors were betting on the app itself fostering the adoption of the Toncoin network.” “This unforeseen incident may make the network’s trajectory more difficult,” according to Bloomberg.
Investment firms that heavily invested in Toncoin are currently reassessing their stances. Although it withheld details, Pantera Capital, which is in charge of about $5 billion, identified Toncoin as its biggest investment. Some investors see a chance despite the unrest.
The Risks Associated With Token Deals
Venture capitalists that invest in ventures such as TON are frequently referred to as “token deals,” wherein they receive tokens instead of traditional equity. These transactions are exclusive to the cryptocurrency space and frequently involve liquid monies or assets held for shorter periods. One big benefit of token agreements is that they might allow investors to sell off their shares more quickly because tokens usually unlock after a year.
The volatility of token investments exposes investors to higher risks even if they can have benefits like faster feedback on a project’s performance. Reports to investors promptly reflect a decline in a token’s value.
The future of Toncoin and Telegram is unknown at this moment. The future of Durov’s business and the related cryptocurrency endeavours will probably continue to be a major concern for both customers and investors as he works through his legal issues.