#Telegram’s refusal to provide access to the encrypted messages  is the official reason  for  the authorities’ decision to block the popular messenger. But the real reason behind could be company’s plans to launch its own cryptocurrency, RBC reports.

 

Real reasons behind the ban

The Russian Federal Security Service (FSB), or to be more exact the so-called 12th centre responsible for IT-related investigations, is now discussing the failure to block the Telegram messenger in Russia. The attempt ongoing for several days now has led to the blocking of IP addresses at clouds of Amazon, Google and other providers. But here is an interesting detail. On 18 April, FSB officer Roman Antipkin sent a letter to his colleagues mentioning that the real reason behind blocking Telegram in Russia is the plan of Pavel Durov (the messenger’s owner) to launch “a fully non-controllable financial system” based on Telegram.

In his letter, the officer explains this blocking is not about the encryption keys and terrorism but about the fact that Pavel #Durov decided to become a new Mavrodi (Russian financial fraudster and creator of MMM pyramid scheme that deprived millions of Russians of their savings in the 1990s) and launch his own cryptocurrency thus creating a financial system in Russia that would be totally out of control [of the authorities]. It would not be a bitcoin for social outcasts, but simple, reliable and non-controllable. This presents a threat to the country’s security. He also wrote that drug traffic, cash pulling, trading human organs will go through this cryptocurrency of Mr. Durov who will claim to be non-responsible for this.

RBC got hold of the text of the letter. A federal official and a top manager from a telecom company confirmed the letter is authentic. Another RBC source from a government-related organization also reviewed the letter. The letter was sent from an email at 12center.ru domain. Both the market participant and the official call Roman Antipkin a person who represented the 12th division of FSB at various meetings, inter alia regarding the Yarovaya law implementation (a package of laws designed to provide additional measures to counteract terrorism and ensure public safety).

Meanwhile, speaking to an RBC correspondent, Antipkin rejected information regarding this letter. Neither the FSB PR centre nor Pavel Durov agreed to answer RBC questions.

 

Dangers of cryptos

Pavel Durov announced his intention to launch a blockchain platform called Telegram Open Network (TOP) with a cryptocurrency called Gram at the end of 2017. The plan was described in detail in a 132-page document signed by Nikolay Durov, Telegram technical director and brother of Pavel Durov. They planned to connect a payment system based on TON to the Telegram messenger and, in the future, launch it in other social networks. According to the document, Durov’s blockchain will be able to process millions of transactions per second compared to only 9-12 transactions per second processed by the most popular payment system that uses Bitcoin while Visa and MasterCard can process several thousands of transactions.

At the beginning of 2018 Telegram-related entities had 2 closed ICO rounds (initial coin offerings) attracting a total of USD1.7bn from investors. Qiwi founder Sergei Solonin and Wimm Bill Dann founder David Yakobashvili were among those investors.

According to the standard agreement between Telegram Group Inc. and the investor, the token buyer has no right to use them for sanction regime violation or money laundering as well as for financing terrorism. These conditions are also included in the annex listing risks of investments, sale or use of Gram. Any illegal use of the new cryptocurrency by dishonest players could violate UK, US and other laws against terrorism financing and money laundering. This could have a serious impact on TON Blockchain reputation worldwide.

Telegram first faced the threat of being blocked in Russia about a year ago but it became a reality only after news emerged on launching Gram and fundraising for the new token. At the beginning of April, Roskomnadzor filed a suit to the Tagansky district court demanding to block Telegram in Russia claiming that its owner does not fulfil his legal obligation and provides no encryption key data to decrypt messages of its users. On 13 April, the court ruled in favour of Roskomnadzor with the decision taking effect immediately. According to Roskomnadzor representative, information distributed via the messenger could violate the law and be used by terrorism and extremist organizations thus creating threats for Russia’s security, life and wellbeing of its citizenships together with the messenger users.

wellbeing of its citizenships together with the messenger users.

 

Financial leverage

FSB concerns are justified. Bitcoin, Etherium and other crypto derivatives are first of all investment vehicles. “Buy it for RUB100 today and sell it for RUB200 tomorrow”. They are not often used for settlement purposes. While TON is designed like a payment tool, in the first place. The transaction processing is expected to be fast and the use of cryptocurrency will require no special knowledge. This means the system could have a much larger amount of users, head of Internet Protection Society Mikhail Klimarov was quoted as saying. He added all these transactions will bypass any government and fiscal authorities. “It is quite probable that these settlement means will be used by “bad guys” as well. In the same way, most murders in Russia are performed with an ordinary kitchen knife. I believe this analogy is clear,” he said.

Another expert, Oleg Demidov from PIR Centre, says that Bitcoin, despite its global scale, remains in the gray market zone in terms of regulations in various jurisdictions. He stressed that quite strict recommendations are in place from international authorities limiting Bitcoin and other crypto currencies due to risks of money laundering and terrorism financing. However, Durov is clearly trying to create a legal project going on ICO and submitting statements on investment rounds to the US Securities and Exchange Commission. “It seems to me one of the key concerns for the regulator is that this global blockchain would be technically more advanced, decentralized and targeting legalization in financial markets. It will be next to impossible to get it back to the grey market zone, especially once it starts operating legally in other countries”

Demidov believes even a successful blocking of Telegram will not make it technically impossible to use TON. “They create a separate blockchain, while the messenger at present runs no blockchain. It was planned to create an initial pool of TON in particular from Telegram users so a successful Telegram blocking would only diminish this pool a little”. Roskomnadzor could only cut Durov’s budget a bit and slow down the launch of TON due to financial reasons. “At the moment Telegram is switching from one cloud provider to another trying to bypass the blocking. This costs quite a lot. Durov has enough money for the battle in the short-term but if the story continues for months or a year, this may slow down the launch of TON.

According to earlier expert estimates, the cost of this ongoing IP address change for Durov could amount from $0.5–1 thousand a month to $1 million per day.