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Telegram has become the go-to app for heroin, guns, and everything illegal. Can crypto save it?
“Far from the level you would expect. Pungent odor of ammonia. Very nervous. One star,” writes one disgruntled customer about his $240 purchase of Colombian cocaine. Another reviewer reported a better experience, leaving a five-star rating and exclaiming, “Better than the street stuff around me!” Recommended.”
This is not a South American drug market or even an obscure dark web market. It is Telegramone of the top five in the world most downloaded The go-to app and communications platform for everyone from activists to cryptocurrency enthusiasts. A recent tour of Telegram channels that function as department stores by Fortune revealed that it’s quick and easy to find everything from heroin jars to stolen stimulus checks to AK-47 machine guns.
Telegram’s end-to-end encryption means no third parties can access user data. But as a result, the app failed to create an advertising-based economy and regulate content. So, to continue operating without selling user data or undergoing the regulatory oversight required by its IPO, the app turned to crypto. (Telegram initially created the Telegram Open Network (TON) but abandoned the project due to regulatory issues. The TON Foundation resumed work on the blockchain to preserve the technology, renaming it The Open Network and launching Toncoin.)
If successful, Telegram could become a “great app” without needing to tune in. But the implications of this situation go further than just opening the dark web to the general public: extremists and criminals who run popular channels could earn cryptocurrencies for their content.
“Creating a Telegram is easier than creating a Facebook account,” says David Maimon, a professor of criminal justice and criminology at Georgia State University who has been monitoring thousands of illicit groups and channels on Telegram since 2019. .For criminals, “Telegram is now the place to go.”
The dark net in your pocket
Telegram’s philosophy is rooted in its political origins. CEO Pavel Durov founded Russia’s most popular social network, VKontakte. In 2014, he was forced to flee after refusing to share his Ukrainian users’ data with the government. Before his expulsion, he had developed Telegram to communicate with his brother, now CTO Nikolai, out of fear of government spying.
With over 900 million monthly active users, Telegram has nearly doubled in size since 2021 and aims to reach 1.5 billion by 2030. Based in Dubai, it has “disclosed 0 bytes of user data to third parties, including governments. » As a result, it is difficult to regulate and monetize, leading to a boom in illicit channels. (Fortune sent messages to Telegram’s PR channel seeking additional comment, but received no response.)
The dark web itself is slow, requires the Tor browser, and its complex URLs change frequently. Telegram can be easily found in the App Store. And if someone can think of something they want, Telegram almost certainly has it. LSD and OxyContin. Cloned credit cards. Stimulus checks. Meandering paragraphs of stolen identities, with victims reduced to their names, dates of birth, social security numbers, emails, passwords, home addresses and card numbers. Typing vaguely related lingo into the app’s search engine brings up dozens of channels, many with tens of thousands of members competing to give you the best deal.
Channels offer drop-down menus, shopping carts, wishlists and reviews. One, “exclusively for members of the credit card industry”, offers free tutorials on how to commit fraud, before customers move on to purchasing CVV codes and card clones. “Our hundreds of satisfied customers will attest to the fact that we offer only the highest quality supplies for your project. We appreciate your trust! », writes the administrator in a broadcast to more than 50,000 members. In the most mundane corners, discounted gift cards, flights and hotel stays exchange hands. “It’s really crazy what’s happening. The spectrum is really broad,” says Maimon.
So attracting big ad dollars is a challenge. “If you protect data and privacy, you can’t sell ads,” Cosmo Jiang, a portfolio manager at Pantera Capital, tells Fortune. “They’re really bad at monetization.”
Telegram launched an advertising platform in 2021. Advertisers can post text messages of 160 characters or less on channels with at least 1,000 subscribers. Telegram channels generate 1 trillion views per month, but only 10% of them are monetized by ads, Durov said in February.
Turning to crypto
An alternative option for Telegram to make money is crypto, which promises the “highest potential to maintain control and monetize,” says Pantera’s Jiang, who invested in TON. Funding is from Pantera “The largest investment ever made,” and earlier this month the company revealed it was raising its initial funding, according to a letter shared with investors and viewed by Fortune.
Launched in 2018, the original TON network was abandoned in 2020 following a legal battle with the Securities and Exchange Commission. But now, in a more favorable regulatory environment and improved market conditions, the company is turning headfirst into crypto in a desperate attempt to monetize without pandering to authorities.
TON, also known as Toncoin, is “Telegram’s largest liquid asset on its balance sheet,” Jiang notes. It accrues staking rewards from transaction fees and protocol issuance. Additionally, there are “trading agreements” where it earns more TON over time based on certain performance criteria, Jiang adds.
In September, Telegram launched a self-custodial wallet called TON Space, built by third-party developers, that allows users to send USDT, its native Toncoin, and Bitcoin to other users. The majority of illicit payments are made off-app via cryptocurrencies, Maimon says, although he has seen “a few mentions” of payments via the TON wallet starting to appear on Russian-operated channels. But with the wallet still in its infancy, TON transfers for illicit goods could become more common.
Building on this momentum, Telegram announced in March that channel owners would begin receiving 50% of all revenue generated from ads on their channels, with all payments settled through TON. It also revealed its Mini Apps feature, which allows users to create apps in Telegram, with the aim of becoming more and more like a super app. WeChatwhich has more than 1.3 billion users, mainly Chinese.
When browsing some illicit channels recently, the only ads that appeared were links to competing stores. So, at least for now, criminals running shops and extremists spreading propaganda will be paid in Toncoin for advertisements on their channels.
So far, Telegram’s crypto bet is working. Toncoin has nearly tripled since March, trading at nearly $7, according to data from CoinGecko. The same month the revenue share was announced, Durov revealed the company is “close to profitability”.
“If TON really takes off, then they never need to go public,” Jiang says. In a channel dedicated to stolen stimulus checks, a seller quotes Lil Wayne: “Scared money doesn’t make money. » In another store of stolen bank details, distributed to more than 27,000 subscribers, we can read: “Put food on the table”.
(This article has been updated to add clarification on The Open Network’s role in the development of the TON blockchain and that the self-custodial wallet integrated into Telegram was developed by a third party.)