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Telegram has become the go-to app for heroin, guns, and everything illegal. Can cryptocurrency save it?

Published

7 months ago

27 June, 2024

Telegram has become the go-to app for heroin, guns, and everything illegal. Can cryptocurrency save it?

“Not even close to the standard you’d expect. Strong ammonia smell. Very jittery. One star,” writes one dissatisfied customer about buying $240 worth of Colombian cocaine. Another reviewer reported a better experience, leaving a five-star review and saying, “Better than the street stuff around me! Recommended.”

This is not a South American drug market or even a dark web market. That’s it Telegramone of the five best in the world most downloaded apps and the communication platform of choice for everyone from activists to cryptocurrency enthusiasts. A recent Fortune tour of the Telegram channels that operate like stores revealed that it’s quick and easy to find everything from pots of heroin to stolen stimulus checks to AK-47 machine guns.

Telegram’s end-to-end encryption means no third party can access user data. But as a result, it has failed to build an advertising-based economy and regulate content. So to keep the lights on without selling user data or enduring the regulatory oversight required to go public, the app turned to cryptography. (Telegram initially created the Telegram Open Network (TON), but abandoned the project due to regulatory concerns. 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 “super app”Without having to clean up their act. But the implications of this go deeper than bringing the dark web to the masses: extremists and criminals who run popular channels can earn cryptocurrency 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 monitored thousands of illicit groups and channels on Telegram since 2019. For criminals, “Telegram now is the place to go.”

The dark net in your pocket

Telegram’s philosophy is rooted in its political origins. CEO Pavel Durov created Russia’s most popular social media network, VKontakte. In 2014, he was forced to flee after refusing to share his Ukrainian users’ data with the government. Before his expulsion, he developed Telegram to communicate with his brother, and now CTO, Nikolai, out of fear of government spying.

With over 900 million monthly active users, Telegram has almost doubled in size since 2021 and aims to reach 1.5 billion by 2030. Headquartered in Dubai, he has “revealed 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 messaged Telegram’s PR channel seeking additional comment but did not receive a response.)

The dark net itself is slow, requires the Tor browser, and its complex URLs change frequently. Telegram can be easily found on the App Store. And if anyone can imagine something they want, Telegram almost certainly has it. LSD and OxyContin. Cloned credit cards. Stimulus checks. Winding paragraphs of stolen identitieswith victims reduced to names, birth dates, Social Security numbers, emails, passwords, home addresses and credit card numbers. Typing vaguely related jargon into the app’s search engine yields dozens of channels, many with tens of thousands of members competing to offer you the best deal.

Channels feature drop-down menus, shopping carts, wish lists, and reviews. An “exclusive for members of the carding 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 caliber supplies for your project. We appreciate your business!” the admin writes in a broadcast to more than 50,000 members. In the most mundane corners, discounted gift cards, flights and hotel stays change hands. “It’s truly crazy what’s happening. The spectrum it’s very broad,” says Maimon.

So attracting big advertising dollars has proven to be a challenge. “If you protect data and privacy, you can’t sell ads,” Cosmo Jiang, a portfolio manager at Pantera Capital, told Fortune. “They’ve been really bad at monetization.”

Telegram launched an ad 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 monthly, but only 10% of them are monetized with ads, Durov he said in February.

Turning to Cryptography

An alternative option for Telegram to raise some money is crypto, which promises the “greatest potential to maintain its control and monetize,” says Jiang of Pantera, which invested in TON. The funding is from Pantera “The greatest investment of all time”, and earlier this month, the company revealed that it is increasing its initial sum, according to a letter shared with investors and seen by Fortune.

Launched in 2018, the original TON network was abandoned in 2020 after a legal battle with the Securities and Exchange Commission. But now, amid a more favorable regulatory environment and better market conditions, the company is moving headlong into crypto in a desperate attempt to monetize without bowing down to authorities.

TON, also known as Toncoin, Jiang notes, is Telegram’s “largest liquid asset on its balance sheet.” It accrues staking rewards from transaction fees and protocol issuance. Additionally, there are “commercial agreements” through which it earns more TON over time based on certain performance criteria, Jiang adds.

Telegram in September saw the launch of a self-custodial wallet called TON Space — built by third-party developers — that lets users send USDT, its native Toncoin, and Bitcoin to other users. Most illicit payments are made outside the app via cryptocurrency, Maimon says, though he has seen “some mentions” of TON wallet payments starting to appear on Russian-operated channels. But with the wallet still in its infancy, TON transfers for illicit goods could become more popular.

Building on this momentum, Telegram announced in March that channel owners would begin receiving 50% of any revenue generated from ads on their channels, with all payments settled in TON. It also unveiled its Mini Apps feature, which allows users to create apps within Telegram in an attempt to become more like the super app WeChatwhich has more than 1.3 billion users, mostly Chinese.

When browsing some of the illicit channels recently, the only ads that appeared were links to rival stores. So, at least for now, criminals who run stores and extremists who broadcast propaganda will be paid in Toncoin for ads on their channels.

So far, Telegram’s crypto-focused strategy is working. Toncoin has nearly tripled since March, trading at around $7, according to data from CoinGecko. In the same month as the revenue sharing announcement, Durov revealed the company is “approaching profitability.”

“If TON really takes off, they’ll never need to go public,” Jiang says. On one channel dedicated to stolen stimulus checks, a salesman quotes Lil Wayne: “Scared money don’t make money.” On another, a shop of stolen bank details that streams to more than 27,000 subscribers, are the words: “Put food on the table.”

(This article has been updated to add clarification about The Open Network’s role in the development of the TON blockchain and that the self-custody wallet integrated into Telegram was developed by a third party.)

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We are the editorial team of FinCrypt, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on FinCrypt, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

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Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

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Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week