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Even as Telegram faces legal scrutiny and grapples with billions in debt, it is set to be profitable for the first time as it tries cryptocurrencies, subscriptions and ads.

In recent months, Telegram, the lightly moderated social media app, has held discussions with investors who lent it more than $2 billion. The goal: to reassure them that the company remains a viable bet after its founder, Pavel Durov, was arrested in France in August on charges related to illicit activities on the platform.

In the conversations, Telegram told investors that it was tackling its legal troubles head-on by policing more user-generated content. The company also said it had paid down a “meaningful amount” of its debt, according to an investor in the talks who was not authorized to discuss confidential information.

Telegram has been under increasing scrutiny around the world this year for hosting illicit content from child predators, drug traffickers and other criminals. The company also faces pressure another way: to prove it can make money.

For years, skeptics have questioned if a platform known for hosting toxic material could turn a profit. Unlike social media companies such as Meta, Telegram took an unusual business path: It did not raise money from venture capitalists, sell advertising based on user data or hire aggressively to accelerate growth. Instead, it relied on Mr. Durov’s fame and fortune to sustain its business, took on debt and barreled into the cryptocurrency market.

Now Telegram is out to show it has found its financial footing so it can move past its legal and regulatory woes, stay independent and eventually hold an initial public offering. It has expanded its content moderation efforts, with more than 750 contractors who police content. It has introduced advertising, subscriptions and video services. And it has used cryptocurrency to pay down its debt and shore up its finances.

The result: Telegram is set to be profitable this year for the first time, according to a person with knowledge of the finances who declined to be identified discussing internal figures. Revenue is on track to surpass $1 billion, up from nearly $350 million last year, the person said. Telegram also has about $500 million in cash reserves, not including crypto assets.

Telegram has nearly 1 billion users, including 12 million subscribers who pay about $5 a month for added features. More than half of its revenue this year came from advertising, the person said, after attracting larger brands such as Samsung. It also plans to expand ads within public channels that attract more than one trillion views a month. Telegram was valued at more than $30 billion earlier this year.

Telegram has been helped by cryptocurrencies in particular, two people said. The company sold hundreds of millions of dollars of digital assets this year, including Toncoin, a virtual currency that was partly built inside Telegram and is now run by outside developers. It has floated new crypto-focused ideas like allowing users to mine cryptocurrencies and exchange them through third-party applications on Telegram.

“Telegram needs a sustainable business model to continue operating as a self-sufficient company,” said Raúl Castañón, a senior analyst for S&P Global Market Intelligence, who has tracked Telegram for the past decade. “They have already done what I consider the most challenging part, which is getting a really sizable user base.”

In a statement, the company said its “priority is the long-term health and sustainability of Telegram’s ecosystem by expanding our monetization efforts, investing in content moderation tools and — most importantly — remaining a neutral platform focused on protecting the privacy of our users.”

The Financial Times earlier reported Telegram’s digital asset sales and valuation.

Yet as Mr. Durov tries to transform Telegram into a mainstream business, he faces a balancing act: how to dial back the platform’s anything-goes approach so it appeals to advertisers and investors, while maintaining the allegiances of users who seek a digital free-speech space.

Mr. Durov’s legal fate also hangs over Telegram’s future. The 40-year-old, who has denied the charges in France, must remain there while under investigation and faces a possible jail sentence if convicted. He is Telegram’s sole owner and its driving force. The company does not have an independent board and has not publicly outlined a succession plan. If it is squeezed for cash or cannot develop a sustainable business model, that could force Mr. Durov to take on more debt or sell part of the company for the first time.

Telegram’s business dilemmas trace back more than a decade.

In 2014, Mr. Durov was pushed out of his previous start-up, the Russian social network VKontakte, when he declined to hand over user data to the Russian authorities. After selling his stake in VKontakte, he used the estimated $300 million in proceeds to bankroll Telegram, pledging to maintain sole ownership and not take money from outside investors.

The arrangement gave Telegram, now in Dubai, independence. Under no pressure to generate revenue, Mr. Durov focused on privacy over advertising and other moneymaking products.

By 2017, Telegram was approaching 200 million users and its costs were soaring for back-end servers, product development and other items. Mr. Durov began exploring new financing options that would also allow him to maintain sole ownership of the company.

“We wanted to be independent,” he said in an April interview with Tucker Carlson. “We knew that our mission and our goals were not necessarily consistent with the goals of the funds that could be investing into us.”

His solution was crypto. In 2018, Telegram raised more than $1.7 billion by pledging to create its own digital currency that would be given to about 170 wealthy investors. The funds were to be used partly to develop blockchain technology for making digital transactions.

Investors included the Silicon Valley venture capital firms Lightspeed Venture Partners and Sequoia Capital. Others were the Russian oligarch Roman Abramovich and Jan Marsalek, an executive at the payment processing firm Wirecard who was later accused of being a Russian spy and is wanted for fraud and other crimes, according to documents seen by The New York Times.

The crypto deal was a success — but in 2020, Telegram was forced to abandon it after the Securities and Exchange Commission said it violated federal securities laws and posed a risk to retail investors.

Telegram agreed to return the money, but had already spent nearly a third of the cash, according to an S.E.C. announcement and a person familiar with the investigation. Telegram offered its backers a partial refund or a promise to repay them with a 10 percent profit at a later date.

Several investors sued. Adding to their anger, Telegram was paying Mr. Durov an annual salary of roughly $12 million from 2018 to 2020, according to records seen by The Times. A private settlement was eventually reached. (Telegram said Mr. Durov’s salary is now 1 UAE dirham a year, worth about 25 cents.)

Around then, Telegram announced its first major efforts to generate revenue, including through advertising. Large brands were reluctant to advertise on a platform known for hosting terrorist propaganda and far-right extremists, though smaller advertisers joined.

Maria Vasileva, 30, who lives in Thailand, said she used Telegram ads to find new subscribers for channels she operates on the platform teaching data analytics. Ads are more successful in countries where Telegram has a large audience, like Russia and Ukraine, she said, but “in other countries, advertisers still need to be convinced about Telegram’s benefits.”

In 2021, Mr. Durov decided to take on debt. He promoted a bond offering by promising investors a 10 percent discount on an eventual public offering of the company.

In several rounds of bond offerings from 2021 to this year, Telegram raised about $2.4 billion from investors including sovereign wealth funds in the United Arab Emirates. BlackRock, the world’s largest asset management firm, also owns some Telegram bonds, according to Bloomberg data.

The bondholder who recently spoke with the company said they were attracted by Telegram’s large user base and growth. Prices for Telegram’s bonds fell after Mr. Durov’s arrest, but have since mostly recovered, a sign the market thinks the company can pay back the money.

In March, Mr. Durov talked up a potential Telegram stock listing to The Financial Times, with the expectation it would happen by early 2026. But plans changed this summer when he was arrested in Paris.

Telegram declined to comment on I.P.O. plans and said it “remains fully owned by Mr. Durov, who has neither the desire nor the need to sell any equity.”

Some investors remain wary. Two U.S. hedge funds said they had reviewed the company’s finances, but opted against backing it, concerned it would not stabilize its business amid the regulatory and legal scrutiny.

Telegram said it would pay back investors on time. Its crypto holdings have recently been bolstered by the incoming Trump administration’s embrace of digital currencies.

Mr. Durov, who has stayed mostly quiet about the accusations against him, has been working out of a Paris hotel since August. He often promotes Telegram’s new business features to his more than 13 million followers on the platform, along with occasional life advice.

It was another down year for mergers and acquisitions, but Wall Street is optimistic that the lengthy lull is coming to an end.

By most measures, 2024 was a year of fits and starts for M.&A., especially compared with a year ago. And I.P.O.s were a flat-out dud.

For deal makers, there are plenty of reasons to hope that 2025 will be better, including a potentially more business-friendly White House and Congress, investor ebullience and a relatively strong American economy. But there are also factors that may keep corporate deal makers on edge.

The year was mixed for deal making. Heading into 2024, bankers and lawyers said that the overall mood in corporate boardrooms was cautious, given geopolitical uncertainties and questions about the vitality of the global economy.

Deal activity ultimately reflected that. While the dollar volume of deals announced in 2024 as of Friday rose 9 percent year-on-year, to $3 trillion, the number of transactions fell 18 percent, to 46,534, according to data from the London Stock Exchange Group. That’s the lowest level since 2015 and worse than 2020, which was afflicted by the coronavirus pandemic.

While a handful of large corporate buyers were willing to take a chance on M.&A., would-be acquirers more broadly were feeling cautious. The biggest takeover bids announced in 2024 included:

(A potential point of comfort is that the biggest transactions covered a broad area of industries, including retail, financial services and technology.)

Among advisers, the usual suspects — Goldman Sachs, Morgan Stanley and JPMorgan Chase — claimed the biggest share of M.&A. activity, collectively participating in nearly $2.3 trillion worth of transactions. A resurgence in investment banking helped push shares in all three to record levels this fall. And Evercore, an independent investment bank, beat out bigger rivals like Barclays and UBS with $266.5 billion worth of advisory assignments.

Despite a bull market for the S&P 500, 2024 was a year to forget for I.P.O.s. Some 1,167 companies went public in the year, raising $110.6 billion. That’s down about 9.5 percent by number and 1.6 percent by fund-raising volume.

While some issuers were willing to brave sometimes choppy markets — top-performing I.P.O.s included those of Lineage, a real estate investment trust, and Reddit, the social media company — investor caution prompted many would-be market debutantes to wait.

Things are already looking up for 2025. Interest rates have come down in the United States and other major markets, as central banks take stock of relatively favorable declines in inflation. That has lowered the cost of financing, an especially important consideration for private equity firms.

By far the most significant reason for hope, deal makers say, is Donald Trump’s election victory and the likely return of deregulation. The president-elect has managed to reassure corporate leaders and their advisers that he will probably go easier on M.&A. than the Biden administration, notably with his picks of Gail Slater to lead the Justice Department’s antitrust division and Andrew Ferguson to head the Federal Trade Commission.

And for I.P.O.s, there’s a backlog of prominent names that could list in 2025, including Shein, the fast-fashion giant, and Klarna, the payment processor. Private equity and venture capital firms have been closely watching for signs of an I.P.O. comeback as a way to finally cash out on long-held investments.

But there are also areas of concern. Corporate leaders have been anxious about whether Trump will follow through on his threats to impose wide-ranging tariffs, which could drastically raise prices and lead to global trade battles even with close allies.

And then there is the prospect of chaos in Washington, despite Republicans set to regain control of both the White House and Congress. The fierce warfare over federal government funding, and some Republicans’ willingness to buck Trump (and Elon Musk, his influential adviser) on key priorities like raising the debt ceiling are reintroducing the No. 1 thing that worries the C-suite: uncertainty.

President-elect Donald Trump is tapping the technology sector for key roles, and executives from the venture capital firm Andreessen Horowitz are featuring heavily.

Big Tech and big government

The flow of Silicon Valley executives President-elect Donald Trump wants to join his administration is becoming a torrent after he announced more picks over the weekend.

It’s the latest evidence of tech heavyweights’ growing influence on Washington, and the venture capital firm Andreessen Horowitz is at the center of it.

Trump tapped a pair of the V.C.’s executives to high-profile roles. He named Scott Kupor, a managing partner at the firm, to be director of the Office of Personnel Management — a role that could make him crucial to streamlining staffing across the federal government.

Trump also appointed Sriram Krishnan, until recently a general partner at Andreessen Horowitz, to advise on artificial intelligence policy. Krishnan is a confidant of Elon Musk, and host of a widely followed tech podcast with his wife. Krishnan will work with David Sacks, the Silicon Valley investor who was an early backer of Trump, and who has been named the White House crypto and A.I. czar.

Other tech names picked by Trump:

The moves come as the tech sector builds bridges with Trump. Silicon Valley has had a reputation of favoring Democrats, but during the election it was home to many of the loudest pro-Trump voices. Since the election, a parade of tech C.E.O.s has traveled to Mar-a-Lago to try to win over the president-elect.

Big Silicon Valley Democrats liked the choices, too. Aaron Levie, the C.E.O. of the data storage company Box who supported Vice President Kamala Harris for president, called the latest picks “very strong.” Other Big Tech luminaries, including Musk and Demis Hassabis, Google’s A.I. chief, were effusive about Krishnan’s appointment.

Andreessen Horowitz has become a key player. Marc Andreessen, a co-founder of the firm, was a very public backer of Trump during the election, saying that the Biden administration was a brake on tech, especially on crypto and A.I. He told the “Honestly With Bari Weiss” podcast that he had spent about half of his time at Mar-a-Lago since Election Day helping the transition team.

What next for the Silicon Valley-Washington relationship? Palantir and Anduril, two big defense tech companies, are in talks to start a consortium to bid for more government work, The Financial Times reports, suggesting that deepening ties are on the cards.

----> AMD at CES

AMD has its work cut out for it at CES 2025. Competitor Nvidia has been sucking the oxygen out of every room it graces, as the chipmaker remains at the forefront of the AI boom. So, how will AMD compete with Nvidia’s reported RTX 5000 announcement? The company should show of its own next-gen GPU.

As part of an ongoing rebrand, the RDNA 4 cards could arrive as either the RX 8000 or RX 9000 series. Regardless of the name and number the company lands on, AMD has its work cut out for it at this year’s show.

The presser kicks off on the early side at 11 a.m. PT/2 p.m. ET on January 6. The company explains, “AMD senior vice president and general manager of the Computing and Graphics Group Jack Huynh, along with other AMD executives will be joined by partners and customers to discuss how AMD is expanding its leadership across PCs and gaming, and highlight the breadth of the company’s high-performance computing and AI product portfolio.”

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--> Sony at CES

Sony knows how to put on a show at CES. The company’s pressers are high-octane, star-studded affairs, as these things go. In addition to standard Sony fare like TVs and audio systems, there’s always a curve ball or two, be it a car, a drone, or a “Gran Turismo” movie. That’s one of the perks of being a massive corporation with your fingers in a lot of verticals.

This year’s press event kicks off at 5 p.m. PT/8 p.m. ET on January 6. We’ve already seen some of what Sony will offer, including the SRH-S1 extended reality headset and additions to the Bravia home theater line.

Sony will be streaming the press conference over on its own site and on YouTube.

xAI, Elon Musk’s AI company, has raised $6 billion in a Series C financing round.

The company announced this week that Andreessen Horowitz , Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others participated.

Kingdom Holdings, the Saudi conglomerate holding company, invested roughly $400 million in the round, according to a public filing. The filing also revealed that xAI is now valued at $45 billion, close to double its previous valuation.

The new cash brings xAI’s total raised to $12 billion, adding to the $6 billion tranche xAI raised in May.

According to the Financial Times, only investors who’d backed xAI in its previous fundraising round were permitted to participate in this one. Reportedly, investors who helped finance Musk’s Twitter acquisition were given access to up to 25% of xAI’s shares.

“xAI’s most powerful model yet … is currently training and we are now focused on launching innovative new consumer and enterprise products,” xAI said in a statement. “The funds from this financing round will be used to further accelerate our advanced infrastructure, ship groundbreaking products … and accelerate … research and development.”

Musk formed xAI last year. Soon after, the company released Grok, a flagship generative AI model that now powers a number of features on X, including a chatbot accessible to X Premium subscribers and free users in some regions.

Grok has what Musk has described as “a rebellious streak” — a willingness to answer “spicy questions that are rejected by most other AI systems.” Told to be vulgar, for example, Grok will happily oblige, spewing profanities and colorful language you won’t hear from ChatGPT.

Musk has derided ChatGPT and other AI systems for being too “woke” and “politically correct,” despite Grok’s own unwillingness to cross certain boundaries and hedge on political subjects. He’s also referred to Grok as “maximally truth-seeking” and less biased than competing models, although there’s evidence to suggest that Grok leans to the left.

Over the past year, Grok has become increasingly ingrained in X, the social network formerly known as Twitter. At launch, Grok was only available to X users — and developers skilled enough to get the “open source” edition up and running.

Thanks to an integration with xAI’s in-house image generation model, Aurora, Grok can generate images on X (without guardrails, controversially). The model can analyze images as well, and summarize news and trending events — imperfectly, mind.

Reports indicate that Grok may handle even more X functions in the future, from enhancing X’s search capabilities and account bios to helping with post analytics and reply settings. X recently got a “Grok button” designed to help users discover “relevant context” and dive deeper into trending discussions and real-time events.

xAI is sprinting to catch up to formidable competitors like OpenAI and Anthropic in the generative AI race. The company launched an API in October, allowing customers to build Grok into third-party apps, platforms, and services. And it just rolled out a standalone Grok iOS app to a test audience.

Musk asserts that it hasn’t been a fair fight.

In a lawsuit filed against OpenAI and Microsoft, OpenAI’s close collaborator, attorneys for Musk accuse OpenAI of “actively trying to eliminate competitors” like xAI by “extracting promises from investors not to fund them.” OpenAI, Musk’s counsel says, also unfairly benefits from Microsoft’s infrastructure and expertise in what the attorneys describe as a “de facto merger.”

Yet Musk often says that X’s data gives xAI a leg up compared to rivals. Last month, X changed its privacy policy to allow third parties, including xAI, to train models on X posts.

Musk, it’s worth noting, was one of the original founders of OpenAI, and left the company in 2018 after disagreements over its direction. He’s argued in previous suits that OpenAI profited from his early involvement yet reneged on its nonprofit pledge to make the fruits of its AI research available to all.

OpenAI, unsurprisingly, disagrees with Musk’s interpretation of events. In a mid-December press release, the company characterized Musk’s lawsuit as misleading, baseless, and a case of sour grapes.

xAI has outlined a vision according to which its models would be trained on data from Musk’s various companies, including Tesla and SpaceX, and the models could then improve technology across those companies. xAI is already powering customer support for SpaceX’s Starlink internet service, according to The Wall Street Journal, and the startup is said to be in talks with Tesla to provide R&D in exchange for some of the carmaker’s revenue.

Tesla shareholders, for one, object to these plans. Several have sued Musk over his decision to start xAI, arguing that Musk has diverted both talent and resources from Tesla to what’s essentially a competing venture.

Nevertheless, the deals — and xAI’s developer and consumer-facing products — have driven xAI’s revenue to around $100 million a year. For comparison, Anthropic is reportedly on pace to generate $1 billion in revenue this year, and OpenAI is targeting $4 billion by the end of 2024.

Musk said this summer that xAI is training the next generation of Grok models at its Memphis data center, which was apparently built in just 122 days and is currently powered partly by portable diesel generators. The company hopes to upgrade the server farm, which contains 100,000 Nvidia GPUs, next year; in a press release, xAI said it plans to fully double that number. (Because of their ability to perform many calculations in parallel, GPUs are the favored chips for training and running models.)

In November, xAI won approval from the regional power authority in Memphis for 150MW of additional power — enough to power roughly 100,000 homes. To win the agency over, xAI pledged to improve the quality of the city’s drinking water and provide the Memphis grid with discounted Tesla-manufactured batteries. But some residents criticized the move, arguing it would strain the grid and worsen the area’s air quality.

Tesla is also expected to use the upgraded data center to improve its autonomous driving technologies.

xAI has expanded quite rapidly from an operations standpoint in the year since its founding, growing from just a dozen employees in March 2023 to over 100 today. In October, the startup moved into OpenAI’s old corporate offices in San Francisco’s Mission neighborhood.

xAI has reportedly told investors it plans to raise more money next year.

It won’t be the only AI lab raising immense cash. Anthropic recently secured $4 billion from Amazon, bringing its total raised to $13.7 billion, while OpenAI raised $6.6 billion in October to grow its war chest to $17.9 billion.

Megadeals like OpenAI’s and Anthropic’s drove AI venture capital activity to $31.1 billion across over 2,000 deals in Q3 2024, per PitchBook data.