Shortly after Pavel Durov, the founder of the messaging app Telegram, was arrested in France on Saturday, the chief executive of the cryptocurrency company Tether called the situation “very concerning.” Crypto enthusiasts pledged to support Mr. Durov, posting the hashtag #FreeDurov. Others investors declared that the arrest was an assault on free speech.
“Can’t even imagine a day without Telegram,” one crypto user wrote.
The wave of support for Mr. Durov was a reflection of the multitrillion-dollar crypto industry’s heavy reliance on Telegram. For years, it has been the chat app of choice for crypto entrepreneurs and venture capitalists, including prominent figures like Justin Sun, the founder of the crypto platform Tron.
In the industry, Telegram has become a popular forum for big-money deal-making, marketing outreach to traders and even crisis management by failed companies like Three Arrows Capital and FTX. A digital coin linked to Telegram is one of the 15 most valuable cryptocurrencies in circulation, according to CoinMarketCap, the crypto data tracker.
“I know a lot of founders and a lot of V.C.s in the crypto space that do most of their work in Telegram,” said Brad Nickel, who founded the crypto platform Kilroy.
Mr. Durov was detained by the French authorities after he landed at Le Bourget Airport near Paris. His arrest was part of a sweeping investigation into criminal activity on Telegram, including money laundering and the distribution of child pornography. He has not been formally charged and remained in custody on Tuesday. Telegram has said that it abides by European laws and that Mr. Durov has “nothing to hide.”
The app has 900 million users globally and exercises limited oversight over the content shared on its platform. It is popular in countries like Ukraine and India, where people use it to text each other and get independent news. It has also become a crucial tool for people looking for safe ways to communicate in nations run by authoritarian governments.
There has long been a natural kinship between Telegram and the crypto industry. Crypto devotees have gravitated to the app’s freewheeling culture, with its emphasis on free expression and resistance to government oversight — the same philosophical values espoused by early crypto enthusiasts.
In turn, the company has dabbled in its own crypto projects. In 2018, Telegram developed a cryptocurrency called Grams, according to legal records. The company agreed to pay $18.5 million in 2020 to settle charges by the Securities and Exchange Commission that it had illegally marketed the digital coins to finance its business.
After the settlement, a variation of the cryptocurrency continued circulating, outside Telegram’s direct control. Telegram now allows users to make payments on its app with Toncoin, a cryptocurrency that is overseen by a separate organization, the Open Network Foundation. The value of Toncoin in circulation totals roughly $13 billion, according to CoinMarketCap.
In May, the venture capital firm Pantera Capital announced that it was making Toncoin the largest investment in its history, saying Telegram “embodies the ethos of crypto.” Pantera did not specify the amount of money it was investing.
“I recently had lunch with Pavel Durov,” a Pantera investor wrote in a blog post announcing the deal. “The purity of his conviction is mesmerizing.”
The value of Toncoin has plunged more than 20 percent since Mr. Durov’s arrest. Pantera did not respond to a request for comment.
In crypto circles, Telegram is widely used to create large group chats, with hundreds or thousands of members, where entrepreneurs offering a new coin can make announcements and address customer complaints.
“It’s really simple just to say, ‘Here’s a group — let’s chat,’” Mr. Nickel said. “That ease of use has really driven a lot of the adoption.”
Telegram also serves as a conduit for the type of high-stakes deal-making and day-to-day communication that usually take place over emails or phone calls in more conventional industries.
When Three Arrows, a crypto hedge fund, collapsed in 2022, its business partners used Telegram to try to call back loans and discuss other complex financial arrangements with the company’s elusive founders, Su Zhu and Kyle Davies.
“Not responding/replying is a bit unprofessional to say the least,” one business partner wrote in a Telegram group chat with Three Arrows that was later excerpted in legal filings.
The app also featured prominently at last year’s criminal trial of Sam Bankman-Fried, the founder of the collapsed FTX crypto exchange.
In court, Caroline Ellison, a top executive in Mr. Bankman-Fried’s empire, testified about Telegram group chats where Mr. Bankman-Fried and others discussed loan repayments to lenders. Those payments eventually became a crucial part of the criminal case against Mr. Bankman-Fried; the government argued that he had stolen FTX customer deposits to pay back the loans.
“What is Telegram?” one prosecutor asked Ms. Ellison.
“Telegram is a messaging platform that was widely used by cryptocurrency companies,” she replied.