Encryption venture capital bets heavily on Toncoin, but concerns arise as the founder is detained.

The detention of Telegram founder Pavel Durov in France has caused a stir in the encryption investment circle, with several well-known institutions having invested in the digital token Toncoin related to the messaging application.

According to reports, more than ten institutions, including Pantera Capital Management, Animoca Brands, and Mirana Ventures, have invested in Toncoin. Telegram is utilizing its blockchain to handle instant payments and other services. Insider sources revealed that the large encryption venture capital firm Pantera invested over $100 million in Toncoin earlier this year.

Investors are eyeing an enticing prospect: Telegram is expected to develop into a digital asset "super app" similar to WeChat, with its 900 million users relying on Toncoin for payments, gaming, and various activities. From February to early July this year, the token's price soared 4 times, with the total locked value on its blockchain TON at one point exceeding 1 billion dollars.

However, Durov was detained for being accused of insufficient efforts to combat crime on Telegram, exposing potential risks. On August 29, he was accused of participating in the dissemination of child pornography and drug trafficking and other illegal activities. Telegram stated that it would comply with European laws.

After Durov was arrested on August 24 in the suburbs of Paris, Toncoin plummeted by about 20%, but has since recovered somewhat. Data shows that the total locked value of TON has fallen to $573 million.

The founder of the encryption investment firm 1kx, Clausen, stated: "Most investors believe that this app itself will greatly promote the adoption of the Toncoin network. Now the company and its founders are facing a black swan event, which may raise doubts about the future."

Venture capitalists investing heavily in Toncoin ( typically agree not to sell for at least a year. ) is assessing whether France's actions against Durov will lead to user loss. Telegram is very popular in the encryption circle, largely due to its loose management, but this has also led the founder into legal disputes.

Pantera claims that Toncoin is its largest single investment, but did not disclose the specific amount. The TON Foundation stated that it has never raised funds. Animoca Brands did not comment on the investment, and Mirana Ventures also did not respond to inquiries.

Some Toncoin supporters remain optimistic. DWF Labs co-founder Ng stated that the company purchased "millions of dollars" worth of tokens in the open market after the price of Toncoin plummeted.

For venture capital and its investors, token trading has several major advantages, the most obvious being a quicker exit. The common model is to start unlocking after 12 months, allowing investors to gradually sell. 1kx founder Clausen stated that the volatility of tokens also allows supporters to gain a more comprehensive understanding of project progress.

Token trading often involves substantial discounts. It is reported that Pantera bought Toncoin at a price 40% below the market price. Based on the average price of $6.32 announced in May, this investment is still profitable.

Insiders revealed that Pantera's lock-up period is one year, after which Toncoin can be sold in batches over several years.

Another characteristic of token investment is the extreme volatility of assets, which will immediately manifest once problems arise. Funds are usually valued periodically based on market capitalization, and significant drops will be directly reflected in reports to limited partners.

The collapse of Do Kwon's TerraUSD project in May 2022 fully illustrates this risk. A few months earlier, investors such as Three Arrows Capital and Jump Crypto purchased over $1 billion in Luna tokens. After the collapse of TerraUSD, Luna became worthless, leading to the bankruptcy of Three Arrows and triggering a chain reaction across the entire industry.