Telegram’s TON Token Loses $3 Billion After Its Founder Is Arrested

One of the hottest projects in crypto, Telegram’s TON, is falling in the aftermath of France arresting its founder — wiping more than $3 billion off its market cap. Plus, former President Donald Trump catches an election odds boost from RFK Jr.’s endorsement.

Here’s what’s happening in the world of crypto (as discussed this week with 2 Punks Capital General Partner Jacob Martin in our weekly news recap video above.

Bitcoin ETF Inflows Boom

Bitcoin continues to capture the attention of investors as the latest CoinShares report showed an impressive total of $533 million flowing into digital asset investment products this week – marking the largest inflows in five weeks.

Nearly the entirety of that flows total was garnered by Bitcoin ETFs, reflecting strong confidence in Bitcoin despite the volatility earlier this summer.

Ethereum, meanwhile, continues to lag, with outflows from Grayscale’s Ethereum Trust persisting as many investors seem hesitant to embrace the narrative that Ethereum can rival Bitcoin’s dominance. As our guest Jacob Martin pointed out, Bitcoin’s position as “digital gold” has solidified, leaving Ethereum with a more complex story to sell, especially to casual investors. It’s clear that Bitcoin’s narrative is resonating with both retail and institutional investors alike.

TON Tanks After France Arrests Telegram Founder

The crypto world was shaken this week by the arrest of Pavel Durov, the 39-year-old founder of Telegram, in France. Durov, often dubbed “Russia’s Mark Zuckerberg,” was detained in an airport just outside of Paris. The arrest, linked to a complaint regarding Telegram's moderation policies, has sent ripples through the market, causing the token TON (Telegram Open Network) to drop 15% to under $6.

Telegram, which is one of the largest tech companies in the world with close to one billion users, had launched its TON blockchain project in 2018. It had recently been upgraded to operate in earnest in 2022 with an open marketplace for builders. The arrest has sparked a new rallying cry for freedom of speech and freedom of privacy as Durov had been expanding his company’s ability to combine messaging with payments.

While the market reaction has been somewhat muted by crypto standards, the long-term implications of Durov’s arrest could now trigger a global reckoning with how platforms should be held accountable for actions of users (and whether they can simultaneously ensure user privacy from prying government eyes.)

“Telegram's CEO Pavel Durov has nothing to hide and travels frequently in Europe,” the company said in a post. “It is absurd to claim that a platform or its owner are responsible for abuse of that platform.”

Kamala Stays Quiet on Crypto

In the U.S., the political landscape remains almost as uncertain for crypto, particularly on the Democratic side. Vice President Kamala Harris has yet to clarify her stance on crypto, leaving many in the industry wondering where the party truly stands. Despite early optimism from some pro-crypto circles, the inclusion of figures from the “Choke Point 2.0” camp in her circle has dampened enthusiasm.

Many are expressing skepticism about the Harris campaign’s commitment to crypto, pointing out that the Democratic Party’s recent actions don’t inspire confidence in a pro-crypto shift. As the election season heats up, the silence from key Democratic figures on crypto could have significant implications for the industry’s future in the U.S.

Despite rumors that the September debate might not happen, you get the sense that time is running out on the Harris “crypto reset” the industry had hoped for. Some speculated Trump earning the endorsement of RFK Jr. may have been behind his surge in election odds to pull back even with Harris on Polymarket – seemingly enough to boost Bitcoin’s price this weekend.

This week, we took a closer look at Trump’s about face on crypto — and why he went from calling Bitcoin “a scam” to shouting “never sell your bitcoin.”

El Salvador Keeps Buying Bitcoin

El Salvador continues to make headlines with its ongoing commitment to Bitcoin. The country has accumulated around 6,000 Bitcoin, valued at approximately $361 million, representing nearly 1% of its GDP.

President Nayib Bukele’s strategy of “buying a Bitcoin a day” seems as much about making a statement as it is about financial strategy. While the long-term impact of this accumulation remains to be seen, it has undeniably put El Salvador on the map as a key player in the crypto world. As Jacob highlighted, this move is less about immediate gains and more about solidifying Bitcoin’s role as a legitimate national asset. However, questions remain about the ultimate goal of this strategy and its potential to truly transform El Salvador’s economy.

The country is sitting on about $60 million in paper profits, up about 45% since El Salvador’s experiment to buy Bitcoin began.

Other Web3 Headlines

• Tron Jumps Into Top 10 on Meme Coin Hype as Telegram-Linked TON Falls

• Solana daily transaction fees drop to multi-month low as memecoin hype cools

• Ethereum trading volume and transaction count decline in August

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