The arrest of tech billionaire and Telegram founder Pavel Durov by French authorities on Saturday evening at an airport outside Paris for violations related to the app and a failure to prosecute its criminal use has sent shockwaves through the industry.
The arrest followed a French arrest warrant against Durov on allegations that Telegram’s lack of moderation facilitated illegal activities such as money laundering, drug trafficking and the distribution of paedophile content.
What do we know about Pavel Durov?
Pavel Durov, 39, is the founder and owner of Telegram, a popular messaging app that competes with major platforms such as Meta’s WhatsApp, Instagram, TikTok and China’s WeChat. The app is expected to surpass the one billion monthly active users mark next year.
Durov, a free speech advocate, co-founded Telegram with his brother in 2013. A year later, he fled Russia after refusing to hand over the data of certain Ukrainian users of VKontakte, a social networking app he founded in St. Petersburg in 2007, to Russian intelligence.
“I prefer to be free than to take orders from anyone,” Durov is said to have said in 2014.
Telegram was banned in Russia in 2018 but was allowed again in 2021.
Durvo currently lives in Dubai and holds dual citizenship of the United Arab Emirates and France. His estimated net worth is between $9 billion and $15.5 billion.
What allegations are made against Durov?
Researchers believe Telegram remains a hotbed for criminal activity as well as extremist or terrorist content and misinformation. Critics have suggested that the Kremlin may have ties to or influence over Telegram, a claim Durov dismissed as “inaccurate,” according to a Financial Times report.
The app has also been criticised in the UK for hosting extreme channels linked to recent violence. Although it has removed some of the harmful groups, experts say its moderation of harmful content is weaker than other apps.
French authorities and European Union technology regulators have contacted Telegram regarding its compliance with new online content legislation.
The Moscow Times reported that the French arrest warrant against Durov includes charges of aiding and abetting drug trafficking, crimes against children and fraud, among others, due to moderation issues on Telegram and his alleged lack of cooperation with law enforcement.
How has Telegram performed financially?
Telegram’s financial journey began in 2017. Previously, Durov supported the messenger with the funds he received after leaving Vkontakte – about $400 million.
When brothers Pavel and Nikolai Durov realized they needed to raise funds, they decided to create a blockchain platform called Telegram Open Network (TON) with their own cryptocurrency Gram, according to a report in Russian daily Pravda.
Durov has not sold the company for three years, and the messenger’s business model does not seem to be self-sustaining. That is why he has repeatedly asked investors for help, including those close to the Kremlin leadership.
But in 2019, the company was ordered to repay $1.2 billion to investors and pay a $18.5 million fine.
To boost demand, Telegram has apparently promised to hold an IPO in which bondholders will have the right to convert their bonds into shares at a discount of 10 to 20 percent. The 10 percent discount will apply if the IPO takes place before spring 2024. It will rise to 15 percent in 2025 and 20 percent in 2026.
The company introduced a paid Telegram Premium subscription in June 2022. Durov said in December 2022 that the number of paying users had reached 1 million, which is only 0.14% of the stated number of app users.
Telegram’s revenue from in-app purchases on the Apple App Store reached $2.4 million in July 2023. This is 80% of the messenger app’s total revenue from both platforms, as monthly revenue from in-app purchases from Android users on the Google Play Store was only $588,000 in the same month.
Durov, who fully owns Telegram, said the company had been offered “valuations worth over $30 billion” by potential investors, including “global late-stage tech funds,” but ruled out a sale of the platform while he explores a future IPO, as reported by The Financial Times.
Telegram investors include Russian David Yakovashvili, who invested $10 million, and oligarch Roman Abramovich. The former is under Ukrainian sanctions, while Abramovich is on the sanctions lists of the European Union, the United States, Switzerland, Canada, Ukraine and other countries.
Russia’s Forbes noted that Bank 131 founder Dmitry Yeremeev also invested in Telegram.
How does the Kremlin react to Durov’s imprisonment?
Former Russian President Dmitry Medvedev, now chairman of Russia’s Security Council, said he warned him that refusing to cooperate with law enforcement would lead to problems in any country.
“He miscalculated,” Medvedev said. “For all our common enemies, he is Russian – and therefore unpredictable and dangerous.” Medvedev added: “Durov should finally understand that you cannot choose your homeland.”
According to Russian state news agency TASS, the Russian embassy in France has requested consular access to Durov and insisted that his rights be protected. The embassy noted that France has so far avoided “any engagement” regarding Durov’s situation. Russian diplomats are reportedly in contact with Durov’s lawyer to clarify the matter.
Local media reported that Durov had arrived from Azerbaijan on his private jet when he was arrested. The French agency Ofmin, which fights violence against minors, reportedly issued the arrest warrant for Durov. The agency is coordinating a preliminary investigation into alleged crimes, including fraud, drug trafficking, cyberbullying, organized crime and promoting terrorism.
