Telegram’s Crypto Boom: $525 Million Revenue Amid Legal Turmoil

Telegram, the popular messaging platform, achieved remarkable financial success in the first half of 2024, recording $525 million in revenue. This surge was fueled by strategic ventures into cryptocurrency, particularly its holdings and partnerships involving Toncoin. However, the period also brought controversy as founder Pavel Durov faced legal issues, raising questions about the platform's future.

Crypto-Driven Growth

Financial reports reveal that Telegram’s cryptocurrency holdings skyrocketed in value, rising from $400 million at the end of 2023 to $1.3 billion by mid-2024. This growth bolstered the company’s financial position, even as it navigated legal and operational challenges.

A pivotal moment came with a $225 million one-time deal where Telegram granted Toncoin exclusive status for small businesses to purchase advertising on the app. This arrangement not only drove revenue but also highlighted Telegram’s innovative approach to integrating crypto into its business model.

Strong Revenue Despite Controversy

Telegram reported $353 million in cryptocurrency transactions in the first half of 2024, contributing significantly to its profits after taxes, which totaled $335 million. Despite fluctuations in the value of Toncoin following Durov’s arrest in August, the platform maintained robust financial performance.

In an October investor report, Telegram reassured stakeholders that Durov’s detention had not materially impacted its operations. The charges, which include allegations related to content moderation lapses, were directed at Durov personally and not the company.

Advertising and Subscription Expansion

Beyond crypto, Telegram is expanding its revenue streams through advertising and subscriptions. Advertising revenue reached $120 million in the first half of 2024, while premium subscriptions brought in $119 million. The company has outlined plans to further monetize its platform by introducing business accounts and sharing 50% of advertising revenue with content creators.

Telegram’s strategic approach to advertising and subscriptions mirrors the successful models of competing platforms, providing a diversified revenue base that reduces dependence on volatile crypto markets.

Debt and IPO Prospects

Telegram’s financial strategy includes managing $2.4 billion in debt financing raised since 2021. The company repurchased $124.5 million in bonds in September 2024, demonstrating its commitment to financial stability.

Speculation about a potential IPO continues, with bondholders potentially converting their investments into shares at a discount if the placement occurs before March 2026. Pavel Durov has acknowledged the value of an IPO in democratizing access to Telegram’s equity but has yet to disclose a timeline.

Legal Challenges for Pavel Durov

On August 24, 2024, Durov was detained in Paris on allegations related to insufficient content moderation on Telegram, including claims of facilitating harmful activities such as fraud and distribution of illegal content. Released on €5 million bail, Durov is required to report to authorities regularly while the investigation continues.

Telegram stated in its investor report that it is enhancing content moderation practices, expanding its verification methodologies, and increasing the size of its moderation team. The company emphasized compliance with French law and its commitment to cooperating with authorities.

Meanwhile, investigations into Telegram’s operations have expanded, with Belgium joining France in a coordinated effort to examine the platform's role in enabling illicit activities.

The Road Ahead

Telegram’s ability to generate substantial revenue through cryptocurrency, advertising, and subscriptions underscores its resilience and innovation. However, the company faces significant challenges, including reputational risks and operational pressures stemming from its founder's legal troubles and regulatory scrutiny.

As the platform navigates these complexities, its future growth will depend on balancing financial success with responsible content moderation and compliance with international laws. Telegram's ongoing evolution highlights the intersection of innovation and accountability in the digital age.