TLDR Don't use Telegram's wallet for bitcoin; the wallet really sucks. Also, not all bitcoin adoption is good. I feel this case with Telegram adopting bitcoin is not good, because the wallet sucks and would give users a bad impression that bitcoin also sucks; which in turn might slow down adoption.

A few days ago, I heard about Telegram's new support for bitcoin in their native in app wallet. Being a curious bitcoiner that like to play with wallets, I opened up Telegram on my phone and fired up the wallet bot. I was excited to send some sats over to the wallet to test it out, but when I clicked the deposit button and saw the legacy address, it immediately kill all my excitement about this new wallet. It was such a turn off that I decided not to try sending sats to the Telegram wallet (high on chain fees at that time, and know legacy address would cause the transaction to be even more expensive were also part of the reasons). Little did I know, I should have stayed with my initial instinct and should have stayed away from this horrible wallet.

The next day, I came across this post written by @chungkingexpress that talks about his experience with the Telegram wallet. One thing that caught my eye was his mention of 1100sats being flagged as high risk because he funded the deposit transaction using "a simple swap service to do Lightning -> Bitcoin". And the Telegram wallet indicated that they will return the funds and asked for a return address. So, chain analysis on all incoming coins, big or small? That's interesting, I thought to myself! Of course, curiosity not only kills cats, but it also moves sats.

I happened to have a 100k sat UTXO that went through several rounds of coinjoin. Wanting to check out the chain analysis on the Telegram wallet myself, my urge to send sats to this wallet came back stronger than every. Don't trust, verify, right? And send some sats, I did. It was a simple transaction, from 1 input to 3 outputs. 100k sats UTXO that underwent a few rounds of coinjoin a while back, into 10k sats to the Telegram wallet, about 2k sats mining fee, and the rest as change back to my own wallet. The transaction took some time to confirm, thanks to the relatively high fee market of late. When eventually the transactions had 2 confirmations, I received the following message on Telegram:

Checking the wallet balance, I got the following:

Seeing that the bitcoin was on hold, I decided to wait; plus it was already late, so I thought I'll just deal with it in the morning.

When I woke up the next morning, I saw that my deposit amount was still on hold (this was 10 hours after the original transaction got 2 confirmations). Immediately, I sent a message to the wallet support bot asking why, and got the following reply:

Almost 2 hours later, I received the following response:

So yes, it seems Telegram does use chain analysis; and it also seems UTXOs that went through coinjoin is not welcome on their wallet. @chungkingexpress was right!

I decided to do 1 more test and see if I could deposit bitcoin from non-coinjoined, supposedly "clean" UTXOs. When I clicked deposit, I got the following message from the wallet bot:

I guess my punishment for using "tinted" coins on Telegram is a deposit ban on the Telegram wallet? Very interesting!

Finally, to salvage my 10k sats and see how much I can get back, I provided a return address to wallet support for a refund. About 14 hours later, I received a withdrawal receipt (address and last digits of amounts were blacked out for privacy):

But when I went to mempool.space to check on the transaction, I found that the actual transaction included on the time chain did not match the description of the receipt sent by Telegram. Namely, over 500 sats were sent back to the original legacy address I used for the original wallet deposit, and the total amount sent to my wallet was not 32xx sats, but 272x sats. See following transaction (again addresses and last digits of amounts were blacked out for privacy):

Seeing that, a few questions came to mind. Why did they not allow additional deposits from me? Why did they send those 500 something sats back to the original deposit address? Were they fees for doing the refund? If so, why did they not tell me up front, but instead told me the return amount was over 3000 sats, where in reality, I only got 2000 something sats? If the 500 something sats were not refund fees, then what was the purpose of send that amount back the the deposit address? Does it have anything to do with future chain analysis?

Being curious and wanting my questions answered, I reached out to wallet support, again. This time, I raised my concerns and asked them the questions I had. I got the follow reply from them:

So I waited, and waited, and waited. While I waited, a few thoughts came to mind as a result of this Telegram wallet experiment / experience.

The way Telegram implemented bitcoin support on their native wallet was, simply put, horrible. It uses on chain only, legacy addresses and does not support lightning, which makes the experience more expensive and slower to use. The fact that they use chain analysis to only accept "clean" coins and rejects all "anonymous" coins could make the wallet unusable or incompatible with numerous other wallets. Heck, even a swap service that does lightning to bitcoin gets flagged as high risk, then what isn't high risk? How are you supposed to send anything to this wallet? Maybe the only way is sending from a KYC-ed exchange?

It seems as if Telegram is purposefully trying to make the experience of using bitcoin as bad as possible. Imagine a newcomer trying to use bitcoin for the first time; and Telegram's wallet was their first experience with bitcoin. The newcomer would think that what other shitcoiners had been telling them were all true; that bitcoin is slow, cumbersome, and expensive to use. Where, in fact, it is only Telegram's bitcoin wallet that is slow, cumbersome, and expensive to use. The way Telegram adopted bitcoin is the type of bitcoin adoption I do not wish to see. It is major turn off to the millions of Telegram users who might try to use bitcoin, but end up staying away from bitcoin due to the poor user experience. The true adoption that matters, the ground up user adoption of bitcoin might be hindered as a result of this poor bitcoin user experience provided by Telegram.

As I waited even longer, I came to the realization that I might never get answers for my questions directed to wallet support, regardless of how long I wait. I also came to the realization that not all bitcoin adoption is good; but I am willing to wait for the good adoption and will attempt to call out the bullshit along the way. After all, bitcoiners are suppose to have a low time preference but zero patience for bullshit, yes?

Just my 2 sats. Keep working and keep it real.