Telegram to Build a Decentralized Crypto Exchange to Prevent Another FTX Crash, Says CEO

Pavel Durov – Founder and CEO of the mes­sag­ing appli­ca­tion Telegram – thinks the FTX crash occurred because the blockchain indus­try has recent­ly devi­at­ed from its decen­tral­ized nature. He argued that a few indi­vid­u­als abused their pow­er, lead­ing to the spec­tac­u­lar collapse.

The Russ­ian-born entre­pre­neur said Telegram’s next goal is to cre­ate non-cus­to­di­al wal­lets and decen­tral­ized exchanges so cryp­to traders could have max­i­mum pro­tec­tion when oper­at­ing in the sector.

The Main Problem is the ‘Excessive Centralization’

Durov is yet anoth­er per­son to com­ment on the recent decay of the cryp­to exchange FTX, say­ing the enti­ty was entire­ly cen­tral­ized, and the con­trol was in the hands of a few peo­ple. He believes they “began to abuse their pow­er,” which prompt­ed the crash and the colos­sal investor losses.

Accord­ing to Durov, such adverse events will be elim­i­nat­ed if blockchain-based projects go “back to their roots – decentralization.” 

“Cryp­tocur­ren­cy users should switch to trust­less trans­ac­tions and self-host­ed wal­lets that don’t rely on any sin­gle third par­ty,” he claimed.

Durov urged devel­op­ers to estab­lish “fast and easy-to-use decen­tral­ized appli­ca­tions for the mass­es.” He said it took him a small team and only five weeks to build Frag­ment – a ful­ly decen­tral­ized blockchain plat­form based on The Open Net­work (TON). Frag­ment has been quite suc­cess­ful, sell­ing around $50,000 worth of user­names in less than 30 days, he added. 

The Russ­ian assured that Telegram’s next step is to intro­duce a vari­ety of decen­tral­ized tools, such as non-cus­to­di­al wal­lets and decen­tral­ized exchange for “mil­lions of people.” 

“This way, we can fix the wrongs caused by the exces­sive cen­tral­iza­tion, which let down hun­dreds of thou­sands of cryp­tocur­ren­cy users,” he stated.

Telegram’s Brainchild

The Open Net­work (pre­vi­ous­ly called Telegram Open Net­work) was designed by the Durov broth­ers (the cre­ators of the mes­sag­ing appli­ca­tion). The idea of the project was to offer fast blockchain trans­ac­tions, min­i­mal fees, and cause a minor impact on the environment. 

Nonethe­less, the launch in 2018 was not that smooth. CEO Durov had to cope with numer­ous scam­mers and fake accounts on Twit­ter until the US SEC approved the ICO sale. 

The watch­dog tem­porar­i­ly restrict­ed the dis­tri­b­u­tion of GRAM tokens (dig­i­tal assets based on the TON blockchain plat­form) in Octo­ber 2019. The Com­mis­sion argued that the ini­tial buy­ers of the coin could resale their stash and thus dis­trib­ute unreg­is­tered securities.

The con­fronta­tion led to a court case in which Telegram lost and with­drew its par­tic­i­pa­tion from the TON net­work. The mes­sag­ing app also start­ed a refund­ing process, repay­ing ear­ly investors $770 mil­lion and plac­ing 5‑year bonds worth $1 bil­lion to cov­er its debts. 

The TON plat­form has its native token called Ton­coin. Its mar­ket cap­i­tal­iza­tion is over $2 bil­lion, while its cur­rent price hov­ers around $1.80.