Nazis and cryptocurrency: the evolution of Telegram
Nazis and cryptocurrency: the evolution of Telegram

How a tiny technology company became a platform for the far right, challenged authoritarian governments, and invaded the cryptocurrency world.

On March 24, Timothy Wilson, a 36-year-old white supremacist who had been on federal law enforcement’s radar for at least seven months, died in an exchange of gunfire with an FBI tactical team in Belton, Missouri, about 20 miles south of Kansas City.

Wilson, according to federal agents, was attempting to create a car bomb to use on the regional hospital in Belton, which he assumed was caring for coronavirus patients.

If you’re wondering what white supremacists see in the pandemic that might advance their cause, Wilson made it clear in a post on the messaging platform Telegram:

“If you don’t think this whole thing was engineered by Jews as a power grab, here is more proof of their plans…Jews have been playing the long game we are the only ones standing in their way,” he wrote under the name “Werewolfe 84”, in a post uncovered by The Informant, a website that reports on hate groups.

Timothy Wilson (Source: Facebook)

When you’re posting a selfie or sharing a cat video, Telegram probably isn’t the first social app that comes to mind. Unless you’re a true member of the digerati, you probably haven’t even heard of it.

But Telegram has an estimated 300 million users worldwide — the vast majority not white supremacists — and is growing. It may never become your favorite social media platform, but there’s a lot to like about Telegram.

It’s completely free and, unlike other social media, doesn’t vacuum up private information and bombard you with ads. It has also taken the right side in privacy fights with oppressive governments like Russia and Iran.

But there’s also the fact that the more unsavory groups banned from platforms like Facebook and Twitter — ISIS, Nazis, the far right conspiracy group QAnon — have all found a home on Telegram. The extremists have been so at home on Telegram that some refer to it as “Terrorgram”.

Telegram’s open door policy for extremists has long been known to law enforcement, journalists and academics. But Telegram may now be on the way to becoming a cryptocurrency trading platform, which could open up new avenues of financing for those very same hate groups.

And that’s something new and potentially troubling.

“Telegram has become a petri dish for extremism,” said Brian Levin, director of the Center for the Study of Hate and Extremism at California State University-San Bernardino.

“The introduction of crypto currency can create a whole lot of networking that wasn’t previously there,” Levin said. “If propaganda is the motor oil of extremism, financing will be the gasoline.”

The Telegram story

Telegram founder Pavel Durov (Source: LinkedIn)

In 2006, Pavel Durov founded the Russian social network VKontakte, often shortened to “VK”, which was so successful that it became known as “the Russian Facebook.”

By 2014, after repeated disputes with the Russian security service, the FSB, VK had been targeted for acquisition by two companies with ties to President Vladimir Putin.

Durov lost control of his company, but ended up with a nice payout. According to the Moscow Times, he sold his 12 percent stake in VK for $300 million.

And Durov had a surprise. He and his brother Nikolai, a math and computer science whiz with expertise in cryptography, had been working on a new encrypted messaging service: Telegram, which was specifically designed to thwart the prying eyes of government security services.

Sometime around 2014, the Durovs and the Telegram team departed Mother Russia. In 2018, after refusing to provide encryption keys to the FSB, Telegram was banned by Russian government Internet censors.

The ban was never entirely successful. Telegram adopted a strategy of hopping from one proxy server to another, staying a step ahead of Russian censors. It remained available for most Russians and was even used by members of the government.

Last month, the Russian government lifted the ban on Telegram, effectively admitting that it had been defeated by Telegram’s hide-and-seek strategy.

“The Digital Resistance movement doesn’t end with last week’s ceasefire in Russia,” Durov wrote on his personal Telegram channel. “It is just getting started — and going global.”

Over its short life, Telegram has become known for two policies, both grounded in Durov’s bedrock libertarian philosophy:

A refusal to cooperate with snooping by governments all over the world (Russia, Iran, Indonesia, Bahrain, China, Pakistan, India), resulting in it being banned in many countries.

An open door policy to groups like ISIS, Nazis, and white supremacists, along with the far-right conspiracy group QAnon. Many of the groups landed on Telegram after being banned from platforms like Facebook or Twitter.

“I think that privacy, ultimately, and our right for privacy is more important than our fear of bad things happening, like terrorism,” Durov said at a conference in 2015.

But there’s more to Telegram than Nazis, terrorists and conspiracy theorists.

Pro-democracy protestors in Hong Kong use Telegram to share information on abusive police officers. It has also become a popular messaging platform for the Bitcoin and cryptocurrency community. And respected news outlets like The New York Times, Bloomberg and Forbes magazine use it to promote their content, much as they do on Twitter.

Like many tech entrepreneurs, Durov has become something of a celebrity. In 2017, Bloomberg News reported spotting him “half-naked” on the hookup site Tinder.

In March, he shared wellness and lifestyle tips with his followers on Telegram. “In the last 15 years, I’ve had no alcohol, no caffeine, no meat, no pills and no fast food,” he wrote, adding that he limited his diet to nothing but fish and seafood.

To “improve will power,” Durov swims in the icy waters of Finland or Switzerland every winter. “If you ever faced the necessity to stay in a lake with a thin layer of ice on top for a few minutes, you are less likely to procrastinate when it comes to starting on a boring but necessary project,” he wrote.

When you sign up for Telegram, you get the following greeting: “Telegram is free and will always be free.“ It carries no ads. And some tests that I ran detected no personal data being sucked up for sale to advertisers.

All of which is laudable.

But it raises the question of how, exactly, Telegram stays afloat and continues to grow.

Monetizing 300 million free users

It’s not easy to determine where Telegram is actually located.

In addition to the server hopping strategy that defeated Russian censors, corporate records and statements by the company have linked it to locations in the U.S., U.K., Germany, Singapore and Dubai.

Currently, its corporate office appears to be in London, with an operations center in Dubai. Durov is a citizen of Saint Kitts and Nevis, which is part of the British Commonwealth.

Telegram is not a publicly traded company, which means it is not required to publicly disclose its finances. But there are hints about what keeps it afloat, the first being the reported $300 million payout Durov received when he sold his stake in VK.

“Pavel Durov, who shares our vision, supplied Telegram with a generous donation, so we have quite enough money for the time being. If Telegram runs out, we will introduce non-essential paid options to support the infrastructure and finance developer salaries. But making profits will never be an end-goal for Telegram,” the company said in a statement on its website.

There’s also the fact that Telegram appears to run lean and agile. The corporate analysis site Crunchbase estimates that it has somewhere between 11 and 50 employees.

And it’s not known for burning piles of cash acquiring other companies and products. Since its rollout in 2014, Telegram has remained laser focused on its core business: secure, private messaging.

Finally, and most interestingly, there’s Telegram’s cryptocurrency venture, rolled out in 2018, known as the “Telegram Open Network” or simply “TON”. The TON idea was to sell a blockchain-enabled crypto currency, much like Bitcoin or Ethereum, but known as “Grams”.

Visual representation of the “Gram” (Source: Bitcoinwiki.org)

Users would be able to buy, sell and invest in Grams. And — most important — each of Telegram’s 300 million users would have an online “wallet” that could be used to buy and sell goods and services with the cryptocurrency. If “User A” wanted to transfer funds to “User B”, it could all be done seamlessly using Grams and the Telegram platform.

The practical effect of offering the groups who populate the darker, extremist corners of Telegram easy access to cryptocurrency may be best illustrated by a white supremacist group known as the Russian Imperial Movement (RIM).

RIM, which seeks to re-establish a Russian monarchy, offers paramilitary training to extremists from Russian and other western European counties. In 2016 and 2017, two members of the far right Nordic Resistance Movement, who had been trained by RIM, carried out a series of bombings in Sweden. The targets included two sites housing asylum seekers.

In April, the U.S. government designated RIM a terrorist organization and placed sanctions on it, including a ban on any material support of the organization. But if that support were to come in the form of cryptocurrency, it’s likely that the transaction would already be complete by the time it was detected. The sanctions would be defeated.

And RIM, as it happens, is already on Telegram. It maintains an active recruiting channel, which is updated several times a day and has 487 subscribers.

Through analysis of blockchain data, it is sometimes possible to identify an account holder with “a high degree of mathematical certainty, “ said Hans-Jakob Schindler, a senior director at the Counter Extremism Project, an international policy organization that studies the extremist ideologies and financing.

“However, there is still a legal question whether such an analysis would be admissible in a court of law.”

Cryptocurrency ventures are often funded by an “initial coin offering” or ICO, which is much like the initial public offering that comes when a new stock goes on the market. The difference is that investors are buying coins, in this case Grams, instead of stock.

For the U.S. Securities and Exchange Commission, the Telegram ICO was in fact exactly like an IPO, except that the offering had not been properly approved and registered for sale with federal regulators. And for the SEC, that made it illegal.

By the time the SEC went to court in October 2019, seeking an order to halt the ICO, Telegram had already raised $1.7 billion from early investors. And according to the SEC suit, Telegram would soon be able to “flood” U.S. markets with Grams.

“Once Grams reach the public markets, it will be virtually impossible to unwind the Offering, given that many purchasers’ identities will be shrouded in secrecy, and given the variety of unregulated markets where Grams may be sold, including platforms that promise anonymity and encryption capability to mask transactions,” the SEC suit alleged.

A federal judge in New York blocked any further sale of Grams, which might have put an end to the prospect of Telegram’s 300 million users — white supremacists and QAnon among them — having easy access to encrypted financial transactions.

Or maybe not.

On April 30, Telegram announced that it would not be issuing Grams. But the software developed for selling Grams, including the “wallets” for every Telegram user, had already been made widely available by its developers on the open source sharing platform GitHub.

Within a month, at least three new initiatives based on the software developed by Telegram had appeared. And one, the TON Chinese Community, claims among its members companies offering a “TON mobile wallet” and an “open source client for Telegram.”

Telegram already offers a feature called “Bot Payments”, which allows developers offering goods and services to attach a “Pay” button to the bottom of their messages. When users tap the button, they are prompted for credit card and shipping information.

“Then you get what you paid for. Voila!” according to the Telegram promotion.

“Telegram is an open platform, so bot developers can implement the necessary APIs and accept payments from users starting right now, without lengthy approval dramas,” according to the promotion.

It is uncertain at this point whether the open APIs that Telegram already offers, in concert with the TON software, could be used by independent developers to offer cryptocurrency transactions to Telegram users. But a TON whitepaper published by Telegram said: “All these services can be integrated with third-party messaging and social networking applications, uniting the centralized and decentralized worlds.”

Telegram says it has no involvement in efforts to revive TON.

As for the $1.7 billion that Telegram took in from initial investors, it agreed to repay $1.2 billion to investors as part of its settlement with the SEC. It also agreed to pay an $18 million fine to the SEC.

“We look forward to continuing to pursue our other projects and avenues for innovation, and we hope the regulatory environment for blockchain technology in the US becomes more favorable for others in the future,” Durov said in a statement.

Far right groups

On June 21, the FBI and federal prosecutors announced that Ethan Melzer, a U.S. Army private stationed in Italy, had been charged with using an encrypted messaging application to share sensitive information about his unit’s upcoming movements with the Order of 9 Angels, also known as “O9A”.

O9A is described in court papers as a “Satanic anarchist organization” believing, among other things, that “Adolf Hitler was sent by our gods to guide us to greatness.”

According to the court papers filed against Melzer in Manhattan, he confessed that his goal was to “to facilitate a mass casualty attack” on his Army unit. The charges against Melzer do not mention Telegram specifically, but there are indicators pointing to Telegram as the platform used to pass the information to O9A.

First, the charges state that Melzer used the alias Etil Reggad. A check of Telegram shortly after the charges were announced turned up a user named Etil Reggad, pictured wearing a black ski mask.

Etil Reggad user information on Telegram. (Source: Telegram)

Second, the charges state that some of the planning for the attack took place on a messaging channel used by a neo-Nazi group known as the RapeWaffen Division, whose members promote rape as a weapon in race war and have connections to O9A. The RapeWaffen Division also has maintained presence on Telegram, although its public channel is no longer accessible.

Archived posting on the RapeWaffen Division’s Telegram channel (Source: ADL)

Telegram’s basic messaging features place it pretty much squarely in the same space as other encrypted services like Signal. But it has steadily added security and privacy features, such as end-to-end encryption of secret chats and the ability to easily delete messages across devices.

All of Telegram’s security features, however, don’t help white supremacists in their plotting if they aren’t careful about who they communicate with. And in at least two recent cases, they haven’t been.

The charges against Melzer state that while plotting the mass casualty attack on his Army unit, he was actually communicating with an FBI informant. Timothy Wilson, the white supremacist killed in a shootout with the FBI while planning an attack on a hospital in Missouri, had also been in touch with an FBI informant.

Levin sees the aggregation of extremists on Telegram as a tradeoff. “They’re obviously easier to track when they’re all on a large platform. But it’s also a bigger pool for them to recruit from,” he said.

In 2015, Telegram added a feature known as “broadcast channels”, which allows users to broadcast messages to unlimited numbers of followers, much as they can on Twitter. That feature is a benefit for groups seeking to recruit new followers.

“For clandestine radical right extremist groups, these public Telegram channels are indispensable for spreading their memes, forwarding content from similar channels and attracting new recruits,” wrote Megan Squire, a computer science professor at Elon University who tracks radical right activity online.

Telegram offers other benefits to its users, including the ability to store and share books, instruction manuals, videos and other content. A study by the Combatting Terrorism Center at the U.S. Military Academy found that the file sharing feature had been particularly useful to the Islamic State and its followers. “Telegram has changed the landscape of instructional material distribution by developing a platform that combines extensive file sharing capabilities

in multiple file formats with lax regulation,” the study found.

Last year, Telegram apparently decided that when it comes to ISIS, there are limits. Europol, which acts as an information exchange for law enforcement agencies in the European Union, reported in November that it had collaborated with Telegram on the removal of terrorist content from the platform.

The Europol statement didn’t mention ISIS. But the SITE Intelligence Group, which tracks radical right and jihadi groups online, reported that ISIS channels and accounts were in fact disappearing from Telegram, along with the accounts of many administrators of the channels.

“It’s unclear how Telegram’s removal algorithm worked, specifically, but it was far more targeted than anything the company had employed before,” SITE founder Rita Katz wrote in WIRED last month.

On June 23, there was further news about Telegram that might be alarming to extremists. The Russian news site KOD.RU reported that a database with information on several million Telegram users had leaked and been posted on the dark web.

No discussion of extremist groups on Telegram would be complete without touching on QAnon, the conspiracy minded group best known for spreading the theory that Democratic party leaders and government officials are members of an international pedophilia ring.

QAnon channel on Telegram (Source:Telegram)

QAnon and its followers, like other extremist groups, have been tossed from Facebook and Twitter. And like the others, they found a home on Telegram. QAnon maintains a channel called “Q Alerts” with 6,397 followers. Its on that channel that new statements from the group and its anonymous leader “Q” are announced to followers.

The FBI, in a law enforcement bulletin last year, described QAnon’s beliefs as follows:

“An anonymous government official known as ‘Q’ posts classified information online to reveal a covert effort, led by President Trump, to dismantle a conspiracy involving ‘deep state’ actors and global elites allegedly engaged in an international child sex trafficking ring.”

It may sound ludicrous, but the FBI found that such theories from the political fringe are likely to “motivate some domestic extremists, wholly or in part, to commit criminal and sometimes violent activity.”

A QAnon follower with more than a dozen knives was arrested by New York City police in April after threatening in social media posts to kill former Vice President Joe Biden.

A month earlier, a Staten Island man, said by his lawyer to be influenced by QAnon, was arrested and charged with the murder of a Gambino crime family underboss.

Recently, some of the best known far right channels have been removed from Telegram, including “RapeKrieg” and “Terrorwave Refined.” It’s not clear whether Telegram is launching the sort of board cleanup effort that it used against ISIS, or is simply targeting a few of the worst offenders.

“It’s worth noting that there are several other channels still up that are part of the ‘Terrorgram’ network, which raises questions about why those were not removed,” Joshua Fisher-Birch, a research analyst with the Counter Extremism Project, wrote in an email.

“In short, this is a first step, but it’s unclear what happens from here.”
['Ray Robinson']
['White Supremacy', 'Telegram', 'Social Media', 'Cyrptocurrency', 'Technology']