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Telegram has become the go-to app for heroin, weapons and everything illegal. Can cryptocurrencies save him?
“Nothing near the standard you expect. Strong smell of ammonia. Very nervous. One star,” writes one customer unhappy with his $240 Colombian cocaine purchase. Another reviewer reported a better experience, leaving a five-star rating and enthusing, “Better than the street stuff around me! Advised.”
This is not a South American drug market or even an obscure dark web market. His Telegramone of the top five in the world the most downloaded app and the go-to communications platform for everyone from activists to cryptocurrency enthusiasts. A recent Fortune tour of Telegram channels that function as stores revealed that it’s quick and easy to find everything from jars of heroin to stolen stimulus checks to AK-47 machine guns.
Telegram’s end-to-end encryption means that no third party can access your data. 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 by going public, the app launched its own blockchain, TON (The Open Network), and native token Toncoin.
If successful, Telegram could become a “excellent app” without needing to clean up his act. But the implications of this are deeper than simply bringing the dark web to the masses: Extremists and criminals running 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 monitored thousands of illicit groups and channels on Telegram since 2019. For criminals, “Telegram is now the place to go.”
The dark web in your pocket
Telegram’s philosophy is rooted in its political origins. CEO Pavel Durov created 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, and now CTO, Nikolai, for fear of government espionage.
With over 900 million active monthly users, Telegram has nearly doubled in size since 2021 and aims to reach 1.5 billion by 2030. Headquartered in Dubai, has “disclosed 0 bytes of user data to third parties, including governments.” As a result, it is difficult to regulate and monetize, generating a boom in illicit channels. (Fortune sent messages to Telegram’s PR channel seeking further comment but received no response.)
The dark web itself is slow, requires the Tor browser, and its complex URLs change often. Telegram can easily be found in the App Store. And if someone can imagine something they want, Telegram almost certainly has it. LSD and OxyContin. Cloned credit cards. Stimulus checks. Winding paragraphs by stolen identities, with victims reduced to names, dates of birth, Social Security numbers, emails, passwords, home addresses and card numbers. Typing some vaguely related jargon into the app’s search engine gives you dozens of channels, many with tens of thousands of members competing to give you the best deal.
Channels feature drop-down menus, shopping carts, wishlists, and reviews. One “exclusively for card industry members” 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 company!” writes the administrator in a broadcast to over 50,000 members. In the most mundane corners, discounted gift cards, flights and hotel stays are exchanged. “It’s really crazy what’s going on. The spectrum is really broad,” says Maimon.
Therefore, attracting large advertising dollars has proven to be a challenge. “If you protect data and privacy, you can’t sell ads,” Cosmo Jiang, portfolio manager at Pantera Capital, tells Fortune. “They were really bad at monetization.”
Telegram launched an advertising platform in 2021. Advertisers can publish text messages of 160 characters or less in channels with at least 1,000 subscribers. Telegram channels generate 1 trillion views per month, but only 10% of these are monetized with advertising, Durov She said in February.
Moving on to cryptocurrencies
An alternative option for Telegram to accumulate money is cryptocurrency, which promises “the greatest potential to maintain control and monetize,” says Pantera’s Jiang, who has invested in Telegram’s blockchain, TON. The financing comes from Pantera “the biggest investment ever,” and earlier this month, the company revealed that it is adding to its initial sum, according to a letter shared with investors and seen by Fortune.
Launched in 2018, TON was abandoned in 2020 following a court battle with the Securities and Exchange Commission. But now, in a more favorable regulatory environment and better market conditions, the company is diving headlong into cryptocurrencies in a desperate attempt to monetize without bowing to the authorities.
TON, Jiang notes, is Telegram’s “largest liquid asset on their balance sheet.” Accumulate staking rewards from transaction fees and protocol issuance. Additionally, there are “commercial deals” whereby it earns more TON over time based on certain performance criteria, Jiang adds.
Telegram launched a self-custodial TON wallet in September 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-run channels. But with the wallet still in its infancy, TON transfers for illicit goods could become more widespread.
Building on this momentum, Telegram announced in March that channel owners would start receiving 50% of all ad revenue generated on their channels, with all payments settled in TON. It also revealed its Mini App feature, which allows users to create apps within Telegram, in an effort to become more like the super app WeChatwhich boasts over 1.3 billion users, mostly Chinese.
Recently, while scrolling through some illicit channels, the only advertisements that appeared were links to rival stores. So, at least for now, criminals running shops and extremists broadcasting propaganda will be paid in Toncoin for advertising on their channels.
So far, Telegram’s crypto-centric move is working. According to data from CoinGecko, Toncoin has nearly tripled since March, trading around $7. The same month as the revenue sharing announcement, Durov revealed the company is “getting closer to profitability.”
“If TON really takes off, it will never have to go public,” Jiang says. In a channel dedicated to stolen stimulus checks, a seller quotes Lil Wayne: “Fear money don’t make money.” In another, a store of stolen bank information broadcast to more than 27,000 subscribers, are the words: “Put food on the table.”