FOGINT: Telegram and Its Race Against Time
December 3, 2024
The article is a product of the humans working on the FOGINT team. The image is from Gifr.com.
The Financial Times recently stirred debate in the cryptocurrency community with its article, “Telegram Finances Propped Up by Crypto Gains As Founder Fights Charges.” Telegram’s ambitions for an initial public offering (IPO) hinge on proving it has a sustainable, profitable business model.
According to the FT, Telegram sold off cryptocurrency holdings to shore up its balance sheet, reporting revenue of $525 million. The financials, based on unaudited statements, framed the crypto sale as a “tactical” move, with Durov’s confinement in France having no material impact on the company.
CCN added flair with its piece, “Pavel Durov’s Telegram Nets $335M Windfall: Can It Ride a Crypto Bull to a $30B IPO by 2026,” highlighting that while crypto revenues and TON reserves have helped Telegram stay afloat, the firm still faces substantial debt and operating losses—$259 million in 2023 alone.
Crypto.news zeroed in on debt in its article, “How Telegram Made Over Half a Billion Dollars Thanks to Crypto?” Telegram, wholly owned by Durov, has raised $2.4 billion in debt financing, with repayment looming in 2026. In September, it used part of its crypto proceeds to repurchase $124.5 million in bonds. (Note: None of the news sources we reviewed noted that Telegram is using a variant of the MicroStrategy strategy of acquiring crypto currency to pump up the company’s “value.” See DLNews for more detail.)
The FOGINT research team identifies three key dynamics:
- Cash Flow Through Crypto Sales: Telegram’s crypto transactions inject much-needed liquidity, transforming a significant 2023 loss into a manageable red blot on its financial history.
- Tight Links to The Open Network Foundation (TON): Despite TON’s ostensible independence, the Foundation is deeply intertwined with Telegram. This relationship traces back to the U.S. SEC’s 2019 intervention against GRAM (now TON), which forced Telegram to offload its blockchain to the “independent” Foundation in 2023. Regulators in the U.S., UAE, and Switzerland appear to tolerate this arrangement for now.
- Racing Against the Clock: Telegram is fast-tracking innovations, like the BotFather’s high-speed processing and partnerships with firms such as Ku Group. Its developer meetups and funding programs are designed to rapidly build out its ecosystem. The urgency stems from a softening stance toward law enforcement—Telegram now appears more willing to share user data, potentially feeding into global investigative pipelines.
This newfound openness aligns with Telegram’s aggressive push to monetize its TON blockchain. At the November 1-2 Gateway Conference in Dubai, Telegram launched an all-out campaign to promote its crypto ecosystem. From YouTube videos and meetups to venture fund pitches, the effort signals a company operating in overdrive.
Blockchain researcher Sean Brizendine said: “”The Telegram hype is definitely real, and the Durov brothers’ future is on the line. Now is the time to pay attention as Telegram’s moves are breaking fast and furious.”
Why the rush? Telegram’s 900 million users and its wildly popular crypto games have been critical growth engines. But with its ethos of “do what you want” giving way to “use our crypto platform,” the stakes are higher than ever. The “leader” is in the grasp of French authorities. Fast-fashion-like life cycles of its crypto ventures underline a harsh reality: For Telegram, succeeding in crypto is no longer optional—it’s a turning point for the company and its affiliated organizations. Cornered animals can be more dangerous than some people think.
Stephen E Arnold, December 3, 2024
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