Is encryption a crime?
The detention and investigation of the CEO of Telegram, the globally popular messaging app, raises interesting questions about encryption and decentralization.
The big news this week is the detention and indictment of one of the co-founders and billionaire CEO of the popular Telegram messaging platform.
The situation has a bunch of ramifications and the fallout both legally and politically will likely take some time to understand fully.
If you are unfamiliar with Telegram, here’s a bit of context to help the rest of this post make sense:
- Telegram was founded in 2013 by two brothers from Russia. One of the brothers, Pavel Durov is now the CEO and face of the platform — he was the one detained in Paris last week.
- The Telegram network, which allows direct messaging, group messaging, and the creation of membership-driven channels, has roughly 800 million users globally in 2024. The users are also highly engaged, sending an estimated 70 billion+ daily messages on the platform.
- Telegram incubated and launched a native currency, The Open Network or TON, before spinning it into a separate entity in 2020 over regulatory concerns. TON remains integrated into the platform, making it easy to send and receive money along with messages and chats.
- Telegram offers encrypted messaging, but end-to-end encryption is not the default for all messages. Despite branding about security and privacy, revelations following last week’s events show that there are issues with data privacy and that most content can be seen by people working inside of Telegram.
- Since Telegram can see its users’ messages, it raises questions about the company’s responsibility in controlling or moderating content. So far, Telegram has maintained a hands-off approach to content policing, which has raised red flags with authorities around the world. At issue: Content related to criminal activity, including all of the sketchy stuff you could imagine people using what they thought were protected chats and groups in some of the darkest corners of the internet.
What is happening with Telegram is interesting on several levels. First, French authorities are holding Telegram’s CEO personally responsible for the activities of the platform.
It's hard to imagine other CEOs facing the same kind of risk. It’s not often that we hear about billionaire CEOs getting pulled off their private jets to face any kind of consequence.
Second, global message platforms are a massive part of the internet and hold a tremendous amount of utility for average users.
Lastly, while the issues facing Telegram are portrayed as privacy or network issues, big-picture-wise, this issue also brings up problems related to decentralization and who can or should control these new massive networks.
There’s no such thing as halfway encryption
The sticking point in this whole situation is the level of encryption on the Telegram platform and the role and responsibilities of a trusted third party as a platform provider and content moderator.
It turns out that not every message sent on Telegram is encrypted. You have to opt-in to end-to-end messaging — and it can only happen when sending direct messages to other users. According to media reports, you can not host an encrypted group chat or encrypt the data and communications of an entire channel.
This means that Telegram could have some awareness about what kinds of activities are unfolding on its platform.
The lack of end-to-end encryption on all communications across Telegram opens up lots of legal and ethical questions across a range of hot-button issues like free speech and digital privacy.
Not to mention how to stay compliant with laws across multiple jurisdictions related to social media and digital media safeguards and monitoring policies.
While it might take us weeks to dive into all of the issues related to Telegram’s role and responsibilities across the world’s different legal systems, this conversation does lead to one interesting question: What if Telegram was completely decentralized and didn’t have a corporate structure — or a CEO — to hold accountable?
The role of decentralization
There are already a bunch of media articles trying to make sense of the detention of Durov and some of the implications for other messaging networks like WhatsApp and Signal.
One thing that separates those other messaging networks from Telegram is that they do, by default provide end-to-end encryption for their users. That means the companies behind networks like WhatsApp and Signal can’t moderate their user activity because they can’t read what their users are saying.
Earlier in the year we covered the emergence of decentralized social networks and how new networks are being created with different kinds of infrastructures that are more user-centric from a platform risk perspective.
Turns out, these new kinds of decentralized architectures, which are auditable and can be vetted by outsiders, might suddenly become more compelling — for a number of reasons.
Of course, that doesn’t mean that just because a new network or application is decentralized it will be outside of the bounds of legal jurisdictions.
In that past year, there have been several high-profile cases of developers being held accountable for the code they created, even if there is no trusted third party or on/off switch involved.
How does this fit into the Open Money framework?
Here are a few takeaways about why the Telegram situation matters.
- Cryptography and encryption are important attributes for global information, financial, and communications networks. Understanding how these networks work and how they fit or don’t fit into existing legal and regulatory structures will help inform future innovation (or lack of innovation).
- Decentralization is one of the basic building blocks of Open Money. Decentralized, peer-to-peer networks are essential for ensuring freedom across digital realms. But, it turns out, defining and identifying decentralization can be challenging.
- The next wave of social media will have value and currency systems built in. We are already seeing new kinds of social currencies and memecoins launching and gaining traction. Building new networks is complicated. Learning from the mistakes of previous networks is a great way to leapfrog the same issues.
The Telegram story will likely unfold over the next weeks and months. We’ll check back in on it soon.