How Telegram Made Over $500M Thanks to Crypto?

Telegram’s revenue rose to $525 million in the first half of 2024 before founder Pavel Durov was arrested on charges of criminal activity on the platform.

Telegram told investors that Durov’s detention by French police had “no material impact” on the app, according to the Financial Times. Financial reports showed that the value of the company’s cryptocurrency assets increased and supported the business.

Telegram’s digital assets grew to $1.3 billion in the first half of 2024, from about $400 million at the end of the previous year, according to unaudited financial reports. Capital increase and proceeds from the sale of Toncoin (TON).

The situation worsened in August, when the company’s founder was detained by French authorities and charged with a number of charges.

But in an investor report published Oct. 22, the company said the arrest did not significantly impact its business because the charges were only against its founder. Telegram also reported revenue of $525 million in the six months to the end of June, up 190% from the same period a year ago. Nearly half of that, $225 million, came from a one-time deal with an unnamed partner in which Telegram gave Toncoin special status to small businesses to buy ads on the app.

“Under the terms of the agreement, Telegram “received a fee” in exchange for allowing its cryptocurrency Toncoin to be a private way for small businesses to purchase ads on the app.”

Despite some fluctuations in the Toncoin price following Durov’s arrest, Telegram continued to generate revenue from crypto asset sales. In the first half of 2024, the company recorded $353 million in cryptocurrency transactions and made a profit of $335 million after tax, demonstrating its financial strength.

Experts warn that despite its current successful financial situation, the company may face difficulties in advertising revenue in the future due to its links to sexual violence and terrorist content. Telegram confirmed the need to maintain control over content and improve its moderation system.

Although Durov owns Telegram entirely, he has also raised about $2.4 billion in debt financing that must be repaid by 2026. This September, the company used some of its proceeds to buy back $124.5 million in bonds.

How does Telegram increase its revenue through advertising and subscriptions?

Previously, Durov talked about Telegram’s plans to increase revenue from advertising and subscriptions, similar to the business models of rival platforms. In the first half of the year, advertising revenue reached a record level of $120 million, while premium subscriptions brought in $119 million.

Sources indicate that the company has accumulated crypto assets profitably using favorable market conditions, but the primary strategy remains linked to advertising and paid subscriptions.

According to the FT, Telegram raised nearly $2 billion in 2021 thanks to a $1 billion bond placement. The companies had been predicting an imminent IPO, but in a conversation with the FT, Durov declined to comment on the possible timing and platform of the listing. If the placement is completed before the end of March 2026, bond holders will be able to convert them into shares at a 10-20% discount.

“Generally speaking, we see value [an IPO] “As a way to democratize access to Telegram’s value.”

Durov also talked about Telegram’s plans to expand its advertising platform and its intention to offer creators 50% of the revenue from ads on their channels. The company will also introduce business accounts and a new feature that allows users to meet people nearby.

Durov’s arrest

Despite Durov’s recent legal troubles, Telegram’s revenue is solid. Due to Telegram’s insufficient moderation and refusal to cooperate with the authorities, he was detained at Paris airport on 24 August; this made him a suspect in the distribution of child pornography, fraud and other crimes. The businessman was released on €5 million bail and had to report to the police station twice a week.

In its report, the company stated that it continues its content moderation practices and cooperation with judicial authorities in full compliance with applicable French laws, improved its content verification methodology and expanded its moderation team.

It was later revealed that Belgium had been investigating Telegram since 2020 and would cooperate with French authorities.

According to De Standaard, the countries have created an investigation group in which the competent authorities of both countries will share the results of the investigation and take joint actions.