Telegram founder arrested on multiple charges: Why compliance regulation is important

Source: Beosin

According to CCTV News on August 25, Pavel Durov, founder and CEO of the social media platform Telegram, was arrested in France on the 24th. The report quoted French TF1 TV as saying that Durov may face charges of terrorism, money laundering and drug trafficking.

After the news of the arrest, the encrypted token Toncoin, which is closely related to Telegram, once plummeted by more than 20%.

Source: Coingecko

Who is Pavel Durov?

The 40-year-old Durov was born in Russia and currently lives in Dubai. He became a French citizen in 2021 and is the founder of the social media platform VKontakte (VK) and the instant messaging software Telegram.

In 2006, Durov was inspired by Facebook to create the social platform VK, and then founded Telegram in 2013. However, due to management disagreements and other reasons, Durov resigned as CEO of VK in 2014 and left Russia, and later became a French citizen.

Currently, VK has become Russia's largest social media platform, and Telegram has a huge user base in Russia, Ukraine and other countries. It is also one of the most important social platforms for Russian media and Russian-speaking users, and plans to reach 1 billion users next year.

According to Forbes estimates, Durov is worth $15.5 billion.

Why was Durov arrested? Or due to platform supervision issues

According to media reports, French authorities said the reason for the arrest was the lack of supervision on the platform, which led to a large number of criminal activities including the spread of false information and hate speech.

What does Durov's arrest mean for the currency circle?

It is understood that The Open Network (TON) is a blockchain project created by Telegram in 2018, aiming to build a distributed, high-performance platform that supports decentralized applications and digital assets. Due to regulatory and legal challenges, the project was abandoned in 2020 and continued to be developed by the NewTON team, which was also renamed the TON Foundation.

In short, TON supports an in-application ecosystem, and its advantage is that it simplifies cryptocurrency transactions through Telegram's huge user base and enhances the ease of use and accessibility of blockchain technology.

Durov said at the time that TON would be "far superior" to existing chains such as Bitcoin or Ethereum, and raised $1.2 billion through an initial coin offering (ICO), with venture capital giants such as Sequoia Capital, Benchmark, Kleiner Perkins, and Lightspeed participating.

Due to Durov's arrest, concerns about the potential regulatory compliance of Telegram and its cryptocurrency projects have surged, and investors have sold off their holdings of related tokens.

Coincidentally, on the eve of his arrest, Durov announced in July this year that the number of Telegram users had exceeded the 950 million mark, and a large part of the surge in users came from cryptocurrency games integrated into the platform's "mini apps" - the largest of which, Hamster Kombat, was reported to have attracted more than 300 million players in the months before the launch of the token airdrop (HMSTR).

Public information shows that Telegram has not publicly offered shares. As of April this year, the platform has raised more than $1.5 billion through bond sales and $1.7 billion in financing through cryptocurrency projects.

Compliance and regulation are equally important in any market around the world

This incident highlights the importance of compliance and regulation in any market around the world.
Telegram is closely connected to the entire crypto ecosystem. This incident also tells us that although blockchain technology and crypto assets have brought unprecedented innovation and opportunities, they have also provided new channels for illegal activities. As regulators continue to pay more attention to the virtual asset market, how to ensure the legality and security of transactions has become a major challenge that major crypto platforms and service providers must face.

Durov's arrest and related charges have made people pay more attention to compliance issues in the cryptocurrency market. As cryptocurrencies become more popular around the world, the risks of money laundering, terrorist financing and other illegal activities are also increasing.

Governments and regulators are stepping up efforts to crack down on these illegal activities to ensure the healthy operation of financial markets.

Against this background, compliance and regulation are particularly important for cryptocurrency transactions and virtual asset service providers (VASPs). Through strict KYC (know your customer) and AML (anti-money laundering) measures, platforms can effectively identify and prevent suspicious activities, prevent risks, and protect the interests of investors.

Durov's arrest and the market shock it brought once again remind us of the importance of compliance and regulation in the cryptocurrency field. By adopting advanced anti-money laundering and compliance management platforms, cryptocurrency platforms and service providers can better respond to regulatory challenges, protect user asset security, and promote the healthy development of the entire market. In this highly dynamic and challenging environment, compliance and security have become key factors for the future development of the cryptocurrency industry.