The volume of Hamster Kombat’s HMSTR token rose by 3,720% earlier this month, reaching almost $1.5 billion despite losing 259 million users from its player base. 

HMSTR’s volume increased seemingly out of the blue on November 9, jumping from $39 million at 00:27 GMT to $496 million by 14:03 GMT.

The following day, its volume jumped again to $1.49 billion, a mindblowing 3,720% increase in volume and an all-time high, despite the accompanying player loss.

Its price also shot up 125% from $0.002638 to $0.005954. However, HMSTR’s volume and price then fell to $160 million and $0.003931 over the next four days, an 89% and 33% decrease respectively. 

Read more: Hamster Kombat loses nearly 260 million players in just three months

Hamster Kombat volume surge during withdrawal freeze

What caused the sudden volume increase remains unclear. The only news from Hamster Kombat during the surge was an announcement that token withdrawals were no longer available. Across its YouTube and X socials, no other major news was announced.

News of Hamster Kombat’s season 2 was also unlikely to have caused it as this was already announced last October. It was supposed to launch by the end of October but the team still doesn’t have a concrete date. 

Bitcoin’s price change may have contributed to HSMTR’s volume surge as its price rose from $76,000 on November 9 to $80,000 by November 10. However, it only really began to shoot up in value on November 11 after Hamster Kombat’s volume had already started to drop.

Hamster Kombat does appear open about aspects of its volume. Yesterday, it announced that it had recorded a $1.3 billion 24-hour spot volume and a $4 billion 24-hour perpetual trading volume. It also claimed it has “11 million $HMSTR on-chain holders!”

Protos found its July monthly player base of 300 million had decreased 86% and lost 259 million players by November 4. Its monthly player count now stands at 52 million.

IntoTheBlock data shows the number of daily active addresses fell from roughly 700,000 in late September to just 20,000 yesterday. 

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Hamster Kombat, the tap-to-earn Telegram game that boasted a massive 300-million-strong user base back in August, has reportedly shed 259 million players.

The game’s active monthly player count currently stands at almost 41 million and its token, which launched at a high of $0.009993 on September 26, has dropped by 76% to $0.002392 today.

Earlier this year, Telegram’s CEO described Hamster Kombat as “the fastest-growing digital service in the world,” and claimed it’s part of a new era of mini apps that would bring blockchain to the masses.

However, despite the promise of crypto riches, the game’s sloppily put-together AI art and tedious gameplay haven’t been enough to retain its once-strong player base.

Hamster Kombat’s chequered history 

Local media in Nigeria reported that many players were left feeling betrayed and cheated by Hamster Kombat’s token airdrop. Indeed, BeInCrypto reported that most users could only sell their HMSTR tokens for a single-digit figure despite months of grinding on the app. 

Hamster Kombat also frequently delayed this airdrop and disqualified many players unfairly caught off guard by its new anti-cheat system. In total, a reported 2.3 Million users were banned, and 6.8 billion HMSTR tokens were confiscated.  

Read more: Otherside got $450M from Yuga Labs but its latest game is ‘virtually unplayable’

The game even spooked governments. Iran’s military deputy chief claimed that it was distracting voters from its election and called it a “soft tool” used by the West to challenge Iran’s religious government. The chairman of Russia’s State Duma Committee also called for a ban while branding the game a scam. 

More recently, on October 12, Hamster Kombat posted a disclaimer distancing itself from Gotbit which had just been charged by the Securities and Exchange Commission and accused of offering “market manipulation as a service.”

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Telegram has become a haven for criminal networks in Southeast Asia, helping them to launder stolen funds using crypto, trade hacked data, and acquire tools for fraud, according to a United Nations (UN) report.

As reported by Reuters, the UN says the end-to-end encrypted app has fundamentally changed how organized crime operates. It found criminal enterprises in Southeast Asia, including Chinese syndicates, reportedly make between $27.4 billion and $36.5 billion annually.

Unlicensed crypto exchanges are also reportedly advertising money laundering services on the app. One advert identified by the UN claimed, “We move three million USDT stolen from overseas per day.” 

Criminal networks use Telegram to trade stolen sensitive information, from credit details to passwords, and buy up malware designed to steal funds. At least 10 deepfake software providers were also found to be advertising their services to criminals. 

Read more: Are Telegram chats actually encrypted?

The UN has previously described tether (USDT) as the stablecoin of choice for criminal networks in Asia. Indeed, earlier this year, a filed indictment detailed that somewhere in the region of $35.4 million had been stolen from victims of a pig butchering scam and converted into USDT.

Chinese authorities also dismantled an underground banking group accused of facilitating almost $2 billion worth of illicit transactions using USDT. 

Telegram founder Pavel Durov was arrested in August and charged with allowing Telegram to facilitate drug trafficking, sexual images of children, and criminal transactions.  

Durov has since introduced various changes to the platform, dropping a ‘people nearby’ feature and removing references in the FAQ to private chats being protected.

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A respected investigative journalist has branded Elon Musk a free speech hypocrite after X (formerly Twitter) blocked his account for criticizing Telegram’s controversial content policy.

Bulgarian journalist Christo Grozev claimed he was blocked for complaining about Telegram’s facilitation of child pornography and suggested that the ban was hypocritical of Musk after he called the arrest of Telegram founder Pavel Durov an attack on freedom of speech.

“Elon Musk is thrashing France for wanting Telegram to do LITERALLY what he’s doing,” posted Grozev.

Grozev argues that it isn’t controversial to remove freedom of speech for people with Telegram channels containing the words “underage girls.” However, Musk, who has labeled himself a free speech advocate, has called for the Russian entrepreneur’s release on the grounds that moderation is “a propaganda word for censorship.” 

According to X, Grozev’s post violated its child sexual exploitation policy and he was forced to delete it in order to unlock his account. He was also told he could appeal the restriction.

Read more: Telegram founder Pavel Durov arrested, conspiracy theorists do their thing

Durov was arrested last Saturday. According to prosecutors, the investigation is looking into allegations of child pornography, drug trafficking, and fraudulent transactions on the platform.

Forbes reports that authorities are repeatedly discovering examples of AI-generated child porn being distributed through Telegram channels.

However, it also says that, unlike Meta and TikTok, Telegram has seemingly failed to police this content, accusing it of ignoring law enforcement requests for user data.

According to reports, it has also refused to sign up to international programs to detect and remove online child abuse material, and it has declined to join the National Centre for Missing and Exploited Children (NCMEC) or the Internet Watch Foundation (IWF).

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Authorities in France have arrested Pavel Durov, the founder of Telegram and Russia’s largest social network, VK. Last week, he was in Azerbaijan at the same time as Vladimir Putin. Around the world, hundreds of millions of Telegram users are suddenly questioning a fundamental promise of Pavel Durov: “All chats are secure.”

As of May 2020, Telegram claimed that Durov was the sole financier of its messenger. The application boasts between 700 and 950 million monthly active users. Since 2017, he has repeatedly assured his fans, “Everything is secure.”

However, many cybersecurity experts have questioned this characterization.

Although Telegram’s end-to-end encrypted “Secret Chats” are widely regarded as a truly secure messenger between two devices, there are vulnerabilities in Telegram’s group and standard chats – dwarfing the popularity of Secret Chats by orders of magnitude.

In Telegram, end-to-end encryption is optional. Creating a Secret Chat requires several extra steps and does not allow cloud backups. Most users opt for default settings, which initiate and maintain group and standard chats using non-end-to-end, Telegram-operated services. Telegram calls this “client-server encryption.”

Generally speaking, the overwhelming popularity of non-end-to-end encrypted chats on Telegram is the primary concern for most users. Most Telegram users have chat histories that rely on Telegram’s services. This means users are relying on Telegram to be honest, secure, and trustworthy. However, there are no guarantees.

Concerns of unencrypted Telegram chat history

The second concern about Telegram’s encryption is its ​​proprietary encryption protocol, MTProto. For its part, Telegram claims that it needs a non-open source protocol for “reliability on weak mobile connections as well as speed when dealing with large files.” Skeptics doubt this claim.

A third concern about Telegram is that it refuses to disclose the location of its servers. Rather than permitting independent audits of its data centers, Telegram leaves users to rely on the company’s assurances. Without the ability to independently verify its actual security practices, there is no way to know if its servers are physically secured from tampering.

Transparency is crucial in building trust, especially in cybersecurity. Open-source encryption protocols allow developers to verify claims. Telegram’s choice to not enable end-to-end encrypted settings by default, maintain a proprietary protocol MTProto, and prohibit audits of its servers are three of its biggest criticisms.

Read more: Telegram trading bots force crypto traders to sacrifice self-custody for UX

Many users are unaware that most Telegrams chats are not end-to-end encrypted, relying instead on client-server encryption, which requires trust in Telegram. 

With its founder and CEO now detained in France with limited information available about his charges or reasons for being in Azerbaijan around the same time as Vladimir Putin, Telegram users are left to wonder whether their information is at the center of a geopolitical scandal.

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Trading bots managed via the crypto-friendly messaging app Telegram often require users to input their private keys so they can make trades on their behalf. The increasing numbers of these bots suggest that meme coin traders are happy to forgo one of crypto’s core tenets, self-custody, to smooth the process of buying into the latest hot token.

After all, when betting on the next crypto moonshot, it’s best to be early.

The likes of Maestro, BonkBot, and Banana Gun significantly reduce friction when ape-ing into the next WIF, and some are specifically designed to ‘snipe’ freshly launched tokens.

Rather than worrying about finding the correct pool on one of many decentralized exchanges (DEX), users simply message their instructions to the chatbot, which handles the on-chain activities. Additionally, with some bots claiming to protect trades from front-runners, users may feel reassured that their FOMO won’t end up with them getting ‘sandwiched.’

Read more: Bots are front-running bots front-running Base meme coins

All this convenience comes at a fee, of course; some bots even compete with top DeFi protocols in terms of revenue.

According to Dune Analytics user whale_hunter’s dashboard, trading bots currently account for an average daily volume of $250 million, peaking at over $700 million on March 18. The top five bots have each executed between $1 billion and $4.5 billion in trades.

The trades generate at least $1.7 million in average daily fees and are overwhelmingly focused on Solana, with Coinbase’s Base also growing in popularity.

Just like any DeFi product, however, there’s always the looming threat of hacks, bugs, and rugs. Unibot was exploited in late October, as was Maestro, and in September a bug in Banana Gun’s token contract prompted accusations of a rug pull.

Meme coins

Memecoin season, mostly focused on Solana, has seen wild price moves on tokens with names such as dogwifhat (WIF) and Jeo Boden.

Read more: $10M accidentally burned as Solana memecoin craze continues

Lately, though, as attention stalls, the craze has taken a darker turn as increasingly controversial tickers are launched in a desperate attempt to stand out from the crowd.

As a post-ETF bull run stalls, crypto ‘degens’ will bet on anything to maintain the momentum. Perhaps cocoa will be next.

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After forcing advertisers to pay for Telegram broadcast channel advertisements in TON token, Telegram admitted the obvious: Ad payments would quickly account for far more than 10% of the TON supply at Telegram itself.

To avoid appearing too centralized, CEO Pavel Durov announced plans to sell Telegram’s TON holdings at below-market prices. He is soliciting investors interested in bidding over $1 million for off-market transactions.

Naturally, Durov restated Telegram’s intent to sell TON below current prices as a positive development, emphasizing the supposedly decentralizing effect these sales would have on the TON blockchain network.

“Thanks to the participation of more long-term holders, TON will remain stable and decentralized,” he posted optimistically to his followers.

Sharing ad revenue with creators

Moreover, Telegram offset the otherwise bearish news of these token sales with an ad revenue-sharing announcement. Sharing revenue with creators immediately boosted investor optimism — and the price of TON. Within 30 minutes, TON rallied from $2.15 to $2.95. The token is still trading around $2.68 as of publication time — about 25% higher than before both news announcements.

Even amid treasury liquidations and soliciting private placements to sell its TON supply, investors’ perception of ad revenue-sharing has been consistently positive ever since Elon Musk successfully launched revenue-sharing with X (formerly Twitter) users.

Plans for the Telegram private sales include locking buyers’ TON for up to four years with a linear unlocking schedule. Telegram asked investors willing to agree to lock-up provisions to email their request to bid for at least $1 million via email.

Telegram, which recently bragged about having 800 million monthly active users (MAUs) and one trillion monthly impressions, will distribute ad rev share payments via its new program, aptly named ‘RevShare.’ Participants in up to 100 countries can share up to 50% of advertising revenue from their Telegram app broadcast channels and payments denominated in TON will go to channel holders who opt-in.

Read more: Telegram chats by Jane Street and Jump Crypto staff probed in Terra case

Telegram gets fiat for TON supply

Community members had expressed concern about TON’s concentration in the hands of centralized holders, most notably Telegram. However, Durov said the sales would help stabilize the ecosystem and increase decentralization. Conveniently, it will also help Telegram liquidate its TON crypto holdings into real fiat.

TON, which stands for ‘The Open Network,’ had previously faced an uncertain future when Durov announced that Telegram ended support. The Open Network had run afoul of the US Securities and Exchange Commission (SEC), which accused it of conducting a $1.2 billion unregistered securities sale. Telegram wound up reimbursing investors who bought tokens in that coin offering. TON’s predecessor token, GRAM, is still dead as a result.

Telegram blamed the SEC for killing the initial version of the project, having apparently attempted to clarify that Telegram wasn’t promising profits to anyone who bought GRAMs (an important prong of the Howey Test). After it ended support, it made The Open Network’s code open-source, a move that naturally led to a couple of forks.

Today, TON is back as a token that will be sold from Telegram to investors at a discount compared to its market value and used for payments in Telegram’s new RevShare program.

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The Open Network (TON), formerly known as Telegram Open Network, has suffered a significant slowdown following a surge in activity that some have attributed to the launch of ‘inscriptions’ on TON.

The TON Foundation released a ‘Technical Incident Report,’ which attempts to describe what occurred, attributing the slowdown to “over 3 million new transactions.” 

TonStat, a website that provides TON data, currently shows approximately 2 million transactions on December 5 and an additional 800k on December 6. This was a significant increase from the approximately 266k transactions on December 4.

Read more: Luke Dashjr calls Ordinals a spam ‘bug’ that should be ‘fixed’

The marketing around TON has significantly focused on its ability to manage significant amounts of transactions, including claiming to have set the ‘TPS world record’ and claiming that “TON can handle millions of transactions per second.” It continues to reiterate these claims, claiming in this update that “TON is the most scalable and fastest blockchain in the world.” 

The obvious question then is why the blockchain is not living up to those claims, and the TON Foundation shifts that blame on validators, claiming that they are “running on weak hardware.” 

In response to this immediate problem, the TON Foundation has issued a new version of validator software, which appears to focus on increasing timeouts and managing larger queues. 

However, the network appears to have deeper issues that cannot be corrected this easily. The TON Foundation seems to believe that it will be able to convince validators to upgrade to sufficient hardware if they change the “system of decentralized penalties for validators who do their job poorly or incorrectly,” because currently, the “penalties are too kind.”

However, the other problem is that the transaction fee on TON is fixed, which means they will not scale when demands go up. However, the TON Foundation doesn’t think this is an important change because it insists that “with the target hardware at validators, there will be no problems with the current fixed low commissions.”

Telegram Group and TON Issuer previously had to return over $1 billion to investors and pay a $18.5 million fine to the Securities and Exchange Commission in 2020 due to their token offering.

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