Telegram's Pavel Durov Arrested in France: A Blow to Free Speech
Dear Investors,
Welcome to this week’s edition of the Myth of Money. If you would like to keep in closer touch, please reach out on X (formerly Twitter) below.
Good morning from Maui!
After taking a much needed few days off, I’m excited to dive back in. The markets are alive (with the sound of music 😉 ) and there is a lot to discuss.
Durov Arrested in France
In a dramatic turn of events, Pavel Durov, the Russian-born billionaire and founder of the Telegram messaging app, was reportedly arrested at Le Bourget airport near Paris on Saturday night. His detention, which occurred shortly after landing on a private jet from Azerbaijan, has sparked a wave of reactions, from official Russian protests to criticism by prominent figures like Elon Musk. As the dust settles, questions arise about the true motives behind his arrest and what this means for free speech and digital privacy.
The inquiry centers on allegations that Telegram's lack of moderation has allowed criminal activities to proliferate on the platform, coupled with Durov’s refusal to cooperate with law enforcement. Durov holds dual citizenship in France and the United Arab Emirates, complicating the legal and diplomatic implications of his arrest. Ironically, Russian officials were quick to label the detention as politically motivated, with Maria Butina, a Russian lawmaker, denouncing it as a "witch-hunt by the West." Butina’s strong words reflect the growing tension between Russia and Western nations over control of digital platforms and information flow.
Russia’s foreign ministry has demanded access to Durov, underscoring his French citizenship. Former Russian President Dmitry Medvedev criticized Durov’s departure from Russia, suggesting that his belief in avoiding cooperation with foreign security services was naive. Medvedev’s comments highlight the precarious position Durov finds himself in—viewed as both a defector by Russia and a potential threat by Western powers.
Elon Musk, the billionaire owner of X (formerly Twitter), weighed in on the controversy, lamenting what he sees as a growing attack on free speech in Europe. His comment, “It’s 2030 in Europe and you’re being executed for liking a meme,” underscores concerns that Durov’s arrest could signal a chilling effect on freedom of expression across the continent.
Telegram, which Durov founded after leaving Russia in 2014, has grown into one of the world’s most influential messaging platforms, particularly in Russia, Ukraine, and former Soviet republics. With nearly a billion users, it’s a hub for encrypted communication, often beyond the reach of government surveillance. Durov has been vocal about keeping Telegram a neutral platform, free from geopolitical interference, despite pressure from various governments.
Since Russia’s invasion of Ukraine in 2022, Telegram has become a crucial channel for unfiltered, sometimes graphic content from both sides of the conflict. This has further entrenched the app’s importance in the information wars but also exposed it to increased scrutiny.
Durov’s journey from Russia to Dubai, via Berlin, London, Singapore, and San Francisco, reflects his quest for a safe haven for his company. His refusal to comply with Russian demands to shut down opposition communities on VK, a social media platform he previously owned, led to his departure from Russia in 2014. Since then, he has remained steadfast in his commitment to user privacy and freedom of speech, often clashing with authorities over these principles.
Fed Turns Dovish
The U.S. job market just received a significant reality check. The Bureau of Labor Statistics (BLS) recently revised its job numbers for the 12 months leading up to March 2024, and the findings were startling. Originally, the BLS reported that 2.9 million jobs had been added during that period. However, after a routine annual revision, that number was slashed by 818,000, bringing the total down to just around 2 million. This 28% downward revision is the largest adjustment since 2009, raising important questions about the current state of the U.S. economy and its future trajectory.
The sectors most impacted by the revision were professional and business services, which accounted for about half of the discrepancy. As a result, the year-over-year employment growth rate was revised from 1.9% down to 1.3%, indicating a weaker labor market than previously thought.
This revision comes at a time when workers are already feeling uncertain about their job security. A recent survey in July revealed that 4.4% of American workers expect to lose their jobs in the next four months—the highest rate ever recorded. This heightened job insecurity could have far-reaching implications for consumer confidence and spending, both of which are critical drivers of economic growth.
The Fed is paying close attention to these developments. Minutes from their recent meetings suggest they are leaning toward a rate cut in September, with the job market revision being a significant factor in their decision-making process. A weaker-than-expected labor market could prompt the Fed to act more aggressively to prevent a broader economic slowdown.
Powell’s Message: Rate Cuts Are Coming
During his keynote address in Jackson Hole, Wyoming, Powell made it clear that the time has come for the Fed to ease its restrictive monetary policy. Inflation, which peaked at 9.1% in 2022, has since dropped to 2.9%, giving the Fed more room to maneuver. Powell emphasized that the labor market has "cooled considerably" from its overheated state, but he also cautioned against further weakening.
Powell’s remarks were seen as more dovish than expected, and markets reacted accordingly. Bitcoin surged by more than 5%, reaching above $6300, while traditional markets also saw gains—the Nasdaq rose by 1.7%, and the S&P 500 by 1.2%. The U.S. dollar index fell by 0.6%, and the yield on the 10-year Treasury dipped to 3.80%.
With Powell signaling a rate cut in September, the focus now shifts to how much the Fed will cut. While a 25 basis point reduction is widely expected, the chances of a 50 basis point cut have increased, especially after the BLS’s job market revision. The Fed’s ultimate decision will depend on incoming data, including the next jobs report and inflation numbers for August. Markets predict a total of 0.75% to 1% rate cuts by the end of the year with 75% change of a quarter point cut in September.
Lower interest rates could provide much-needed relief to various sectors of the economy. For example, the housing market, which saw a slump in new starts to their lowest level since May 2020, would likely benefit from reduced borrowing costs. Similarly, lower rates would ease the burden on household borrowers and businesses looking to refinance existing debt.
However, the implications of these rate cuts extend beyond immediate economic relief. With the 2024 presidential election approaching, the Fed’s actions could significantly impact the campaign narratives of candidates like Kamala Harris and Donald Trump. As they lay out their economic plans, it’s clear that the real power lies with the Fed and how it navigates the post-inflation era.
This Week By the Numbers 📈
🌐 Global Business & Economy
X closes operations in Brazil
US start-up failures have increased 7x since 2019
Goldman cuts US recession risk to 20% after economic data
🏦 Central Banks & Policy
BOJ Governor reaffirms that rate hikes are on the table
Sweden's central bank cuts rates to 3.5%
China youth unemployment soars to 17%
💰 Finance & Crypto
PE firms increasingly use dividend recaps in desperation for cash
Value of a Gold bar hits $1M
Tether mints another $1B USDT on TRON
Crowded Bitcoin derivatives bets warn of short squeeze
JPMorgan: BTC mining opportunity worth ~$74B
Mt Gox moves $700M in BTC
BTC rises as Powell indicates rate cut coming
Russia plans to launch crypto exchanges, BRICS stablecoin
🏛️ Politics & Regulation
Harris raises $82M during last week’s DNC
Harris proposes raising corporate tax rate to 28%
Harris promises tax cuts for the middle class
Harris leads trump by 7% in polls
Trump promises "gigantic" tax cuts
Trump says he would offer Elon a cabinet role
China classifies crypto as a tool for money laundering
Nigeria's SEC plans to license crypto exchanges
Binance hit with class action lawsuit for alleged money laundering
🚨 Corporate & Legal
Former Rep. George Santos pleads guilty to wire fraud, identity theft
Trump teases "The Defiant Ones" crypto project
PayPal partners with Anchorage Digital on stablecoin rewards
Hackers seize McDonald’s Instagram; $700k SOL stolen, GRIMMACE crashes from $25M
Manslaughter charges considered in yachting death of Mike Lynch
Soneium blockchain launched by Sony to attract Web3 developers
Partner of FTX executive charged with campaign finance violations
Top Stories 🗞️
Robert F Kennedy Jr suspends campaign and backs Trump
Independent White House candidate Robert F Kennedy Jr has joined the Republican nominee, Donald Trump, on stage at a rally in Arizona after dropping out of the race and endorsing the former US president. Mr Kennedy, 70, a Democrat for most of his life and the scion of the Kennedy dynasty, said the principles that had led him to leave the party had now compelled him "to throw my support to President Trump". He said in a press conference in Phoenix, Arizona, on Friday that he would seek to remove his name from the ballot in 10 battleground states. Before welcoming RFK Jr to the stage on Friday, Trump promised, if elected, to release all remaining documents relating to the 1963 assassination of President John F Kennedy. Trump praised Mr Kennedy as "phenomenal" and "brilliant" at the rally later in Glendale. Democratic rival Kamala Harris said she would try to "earn" the support of Kennedy voters. With November's election looming, Mr Kennedy's polling has slumped from a high of double figures as funds and national coverage dried up.
Coinbase, Ripple Pour Over $100 Million to 'Buy Influence' in US Election, Says Public Citizen
Major crypto companies have emerged as the largest corporate political contributors this year, donating a significant portion of the $248 million to candidates ahead of the upcoming U.S. presidential election in November. Coinbase and Ripple are leading the charge, pouring massive investments into super political action committees that back candidates who support favorable crypto regulation, according to a Public Citizen report.
Russian Finance Minister Discloses That Over 90% of Bilateral Trade With China Is Settled Outside the U.S. Dollar System
Russia has achieved a milestone in its trade relations with China, moving almost all its payments outside the U.S. dollar-led financial system. Russian Finance Minister Anton Soluanov stressed that the country was now conducting 90% of its bilateral trade transactions with China using national currencies (yuan and rubles). At the tenth Russian-Chinese financial dialogue held in Moscow on Monday, and with the presence of its Chinese counterpart Lan Foan, Siluanov stated it was “important” that this switch to payments in friendly currencies was executed. He had declared before that this change was relevant due to the risks of completing these transactions using currencies issued by so-called “unfriendly countries.”
Ukraine Steps Up Strikes Into Russia as Moscow Pushes Ahead in the East
As Ukrainian forces fight to isolate a large group of Russian soldiers caught between a river in Russia’s Kursk Province and the Ukrainian border, Kyiv has launched a series of strikes at airfields, ports and oil depots in other regions of Russia aimed at degrading the Kremlin’s war effort. A Ukrainian missile strike on the Black Sea port of Kavkaz hit a large cargo ferry laden with fuel on Thursday, triggering a towering blaze at the facility, according to Russian and Ukrainian officials as well as video posted to social media channels. Kavkaz is one of the country’s largest passenger ports and the main ferry terminal connecting Russia with Crimea.
From Chaos to Crypto: The Crecimiento Movement Igniting Argentina
Amid soaring inflation and crippling debt, Argentina is turning to crypto as a tool to stabilize its economy and drive growth. As the U.S. retreats from its leadership role in crypto, Argentina is seizing the opportunity to step into the void. At the heart of this transformation is the Crecimiento movement uniting crypto believers, entrepreneurs, and innovators working toward sustainable, crypto-driven reform. With a newly-elected President showing interest in crypto’s potential, Crecimiento is harnessing crypto to help reshape the economy, focusing on payments, credit, property, and more.
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Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. Currently working as a proud General Partner at Moonwalker Capital.
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