Telegram removes the crypto wallet in France after the arrest of Pavel Durov

Telegram has recently removed its crypto wallet service in France, a move that has attracted a lot of attention in the context of the legal issues involving its founder, Pavel Durov. This event is part of a broader picture of regulatory and legal challenges, culminating in the arrest of Durov on August 24, 2024, in Paris. 

The arrest of Durov shocked the tech community and the cryptocurrency community, especially because Telegram is one of the most used platforms for cryptocurrency transactions, as well as being a pillar for encrypted messaging​

The connection between Telegram’s crypto wallet service in France and Durov’s arrest

The French authorities have arrested Pavel Durov in connection with six charges, many of which are related to the management of illegal content on the Telegram platform, such as the distribution of child pornography material and drug trafficking.

However, two of the charges have had a greater impact on the technology sector: the offering of cryptographic services without the necessary government declarations and the importation of a cryptographic application without authorization. 

These accusations leverage a French law from 2004 that requires anyone offering encryption services to notify the ANSSI (the French cybersecurity agency) of the technical characteristics of the cryptographic tools, including the software’s source code.

This regulation, although little known and rarely applied, is now used against Telegram, which is not end-to-end encrypted by default, leaving room for interpretations regarding the control over user data. 

The lack of compliance by Telegram with this regulation has led to serious legal implications for the company and its founder. The French law appears to be in contrast with the vision of Telegram, which has always declared itself in favor of privacy and confidentiality of communications.

The removal of the crypto wallet service by Telegram seems to be a direct response to the intensifying French regulatory pressures. The wallet, which allowed users to make transactions in criptovalute directly through the app, has been a critical point, as European governments have increased scrutiny on services related to cryptocurrencies to prevent illegal activities such as money laundering and fraud.

With the tightening of regulations, Telegram has decided to suspend the service in France to avoid further legal complications​.

The accusations of cryptography and French regulation

The accusations related to cryptography focus on the lack of formal statements from Telegram regarding the security tools used. French law requires that companies offering cryptographic tools declare the technical specifications and provide access to the source code. 

This requirement, although rare in Western countries, is reminiscent of similar regulations adopted in countries like China, where the government has greater surveillance powers over private communications. The application of such regulation against Telegram has created a precedent that could have repercussions on other secure messaging platforms like Signal or WhatsApp.

The lawyer of Durov responded to the accusations by stating that Telegram fully complies with European regulations, including the requirements of the Digital Services Act, which regulates the behavior of digital platforms within the European Union. 

However, the French authorities seem determined to pursue the founder of Telegram for the lack of cooperation in the past and for the non-compliance with encryption laws.

The arrest of Durov and the removal of the crypto wallet service in France raise important questions about the future of encrypted platforms and cryptocurrencies. 

While on one hand Telegram has always represented a stronghold for digital privacy, on the other hand, the lack of compliance with local laws could undermine its position in Europe.

Furthermore, the growing regulatory attention to cryptocurrencies and cryptographic tools poses a dilemma for tech companies: how to balance user privacy protection with compliance to national regulations?

This case highlights the tensions between governments and digital platforms regarding the regulation of cryptography and cryptocurrency transactions.

While users demand greater privacy and security in communications, European governments are pushing for more transparency to combat illegal activities. Durov and Telegram might be just the beginning of a series of legal actions against other tech companies offering similar services. 

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Conclusions

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The future of Telegram in France and in Europe is uncertain. The removal of the crypto wallet service could be seen as an attempt to ease regulatory pressure, but the accusations against Durov suggest that Telegram’s legal issues are far from resolved. 

With the rapidly evolving European regulatory landscape, tech companies will have to contend with new laws and regulations that could redefine the way they operate. Telegram, once considered a safe haven for privacy and freedom of expression, now finds itself having to balance its principles with the need to comply with local laws.