Outside of libertarian-inclined Silicon Valley VCs, Ukraine War obsessives, and crypto enthusiasts, Telegram was not on most Americans’ radars before this weekend. That changed on Saturday when French authorities arrested its Russian-born founder, Pavel Durov, sending the internet aflutter with debates of content moderation and the meddling of superpowers.
Even if you weren’t paying attention to Telegram before Durov was detained upon deboarding from his private plane in Paris, the messaging app company is one of the most fascinating tech stories of the past decade. For one, it has managed to attract more than 900 million users, and—according to Durov at least—approach profitability without selling equity in the company to VCs. Instead, Telegram has relied on billions of dollars in debt financing from players like Abu Dhabi sovereign wealth fund Mubadala and Russia’s state-run investment fund.
Durov is an ideologue, committed to principles of free speech and privacy, who was forced by Russian authorities to divest from his previous venture founding VKontakte, Russia’s biggest social media network, and continues to have a contentious relationship with the Russian government. He started Telegram outside his home country to serve as a “neutral platform,” as he put it, and one where he directed its future. One former employee told me that Durov avoided raising money through equity because of his experience with VK and the “need for control.”
Which brings us to the second curiosity surrounding Telegram. By some evaluations, it has succeeded as the first mainstream crypto app. That, of course, comes with some caveats, and a brief history lesson. In 2018, amid the hype cycle around ICOs, Telegram raised $1.7 billion with the promise of launching a blockchain and token—a strategy for raising capital without doling out equity. The SEC forced the company to abandon its plans and repay the funds it hadn’t spent yet (one of the reasons Telegram subsequently needed to raise debt), but a closely linked group of software developers continued with the plans.
The result was TON, a layer-1 blockchain with an eponymous crypto token that is technically independent from Telegram, but inextricably linked to the messaging app (to the point where many crypto advocates complain about centralization). Unlike competing blockchains such as Ethereum or Solana, TON has a captive audience of actual people in the form of Telegram users, and Telegram has begun to integrate TON into the app, including as payments in an advertisement network, as well as wildly popular point-and-click games like Hamster Kombat. In response, TON’s market cap topped $25 billion.
Buying TON tokens has become a popular play among crypto VCs who are bullish on the growth of the ecosystem; that it provides exposure to Telegram’s upside in the absence of traditional equity certainly doesn’t hurt.
Prior to his arrest, Durov talked about his desire to bring Telegram public, but many investors I spoke with argued that TON could offer an alternative revenue stream that precludes the need for an IPO. “We talked about that a lot internally,” Matthew Graham, the founder and CEO of the VC firm Ryze Labs, told me. “How realistic is it that they would actually IPO, and to what extent might they be thinking about [TON] as the path to monetize.”
But what happens now? As Durov awaits formal charges, his future—and Telegram’s—remain uncertain. With a core staff of just around 60, according to the former employee, Durov’s influence over the company is undeniable, and he may be forced to finally implement moderation and know-your-customer policies that fundamentally change the platform’s main appeal (and profit margins).
And while TON backers might like to argue that it is separate from Telegram, the success of the two ecosystems is intertwined. For now, at least, the blockchain is dependent on Telegram—as reflected by the token’s 25% drop over the weekend.
If you want to read more, you can check out my feature with Jessica Mathews on the uncertain financial prospects for the world’s renegade social media platform.
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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