Iranian general warns of threat posed by Telegram's Gram cryptocurrency to banks

Iranian general warns of threat posed by Telegram's Gram cryptocurrency to banks
General Jalali says Iranian authorities are startled by the prospect of the Gram and accuses Telegram of selling Iranian Big Data to adversaries including US intelligence agencies.
By bne IntelliNews February 1, 2018

The head of Iran’s Passive Defence Organisation has described the planned Gram cryptocurrency of encrypted instant messaging application Telegram as a considerable challenge to Iranian banks and companies, Mehr News Agency reported on January 30.

The comments from Brigadier General Gholamreza Jalali, the chief of an organisation that is a subdivision of the Joint Staff of the Iranian Armed Forces, clearly demonstrate nervousness among top officials ahead of secretive Russian-owned, Dubai-based Telegram's Initial Coin Offering (ICO), due to take place by the Persian New Year in March. The company is aiming to float some $1.2bn worth of Gram cryptocurrency coins as it seeks to enable its messenger app, hugely popular among Iranians, to double as a global payment platform. Iranian authorities, who are suspicious of the motives of Telegram and its true ownership, are closely watching developments.

Jalali, while noting Telegram’s massive presence on the local messaging market—its messaging traffic market share is reckoned to reach up to 95%—was also critical of the enterprise's messaging app for its adverse impact on society in general. Authorities, he said, were startled by the prospect of the Gram, which was launched with the offer of $20mn “Whale” blocks of coins this week. It could “affect jobs in Iran to the point where we can no longer have any cooperation with our banks,” he remarked.

The general went so far as to claim that Telegram’s Russian CEO Pavel Durov—reported by Bloomberg in December to have settled in Dubai after three years roaming the globe in self-exile—sells Iran’s Big Data to adversaries of Iran. “The owner of Telegram does not receive payments for the app’s services... so to earn money, he sells our data to those countries which need it to monitor and analyse Iran,” he said.

Clients for “our data stored in Telegram" include “special clients” such as the US intelligence agencies, Iranian enemies of the Islamic Republic and Israel, he added.

Telegram, with around 180mn users globally, is thought to have some 40mn users in Iran alone—equivalent to half the country's population—and many continue to use the service despite threats of another disconnection by telecom officials. The service was lately disconnected during the nationwide street demonstrations that rocked Iran for around a week from the end of December as officials sought to thwart organisers who were attempting to spread the unrest.

“When Telegram was blocked in Iran, the country’s cyber traffic dropped by 80%,” Jalali noted, adding that “threatening communications stopped, and security forces managed to make timely arrests in various cities across the country and identify the ones leading the protests”.

Jalali openly conceded that with the introduction of the currency in the coming month on the back of blockchain technology, the country could “lose control” and that blocking the application would be meaningless.

Last September, Tehran's prosecutor filed criminal charges against the "management" of Telegram, referring to allegations that the cloud-based service serves as a platform for child pornography and extremist content.

Telegram was founded in 2013 by the charismatic Russian internet entrepreneur Pavel Durov, an avowed libertarian who has battled demands from Russia's main security agency for the encryption keys to his service. For many voters, the service played a prominent role in the May 2017 presidential election. Top politicians and media outlets in Iran are among users of Telegram.

How the plan to raise cash with Gram works
The Telegram Open Network (TON), which is to host the Gram, will seek to decentralise online communication and digital payments. In a 23-page primer on the offering obtained by CoinDesk, TON is outlined as a blockchain protocol for the peer-to-peer movement of funds between users and for making purchases.

Telegram, it appears from the primer, is hoping to enable the secure exchange of micropayments among users and bots, which could be picked up in Central and West Asian countries for cross-border transactions.

To get things moving, Telegram expects to release 5bn Grams, with 4% reserved for the Telegram team. The plan is to sell 44% of the Grams during the ICO.

Pavel Durov’s brother, Nikolai Durov, is said to be the technical brains behind Telegram. He is promising an infinitely scalable version of the blockchain, the distributed ledger that is the basis for all cryptocurrency projects. 

On January 10, in another warning directed at the use of cryptocurrencies by Iranian traders, Central Bank of Iran (CBI) governor Valiollah Seif urged caution among the public when it comes to investing in cryptocurrencies. Seif said that the CBI “would not guarantee investment in Bitcoin” following several reports that Iranians had started moving into the currency, partly given the run on the Iranian rial (IRR) prompted by the nationwide protests a month ago.

The governor advised Iranian citizens to avoid such risky investments, especially given illegal tendering in evidence in Iran. He pointed out that Iran was not alone in warning of the risks of cryptocurrencies. Other central banks around the world have expressed similar caution.