Telegram CEO Pavel Durov was indicted by French judicial authorities for allowing criminal activity on the messaging app, but avoided jail on €5 million bail.
The Russian-born French billionaire was released on the condition that he report to police twice a week and remain in France, Paris prosecutor Laure Vecuot said in a statement.
The charges against Durov include conspiring to spread sexual images of children as well as a number of other violations on messaging apps.
Durov, 39, was detained at Le Bourget airport outside Paris on Saturday on suspicion of failing to tackle illegal content on the service, including the exchange of child sexual images, drug trafficking and fraud.
His sudden arrest has focused attention on criminal liability for Telegram, a popular app with about a billion users, and sparked a debate over free speech and government censorship.
France's cybercrime and fraud investigators said earlier this week that Durov's arrest was part of a wider investigation into allegations that the government had failed to curb criminal activity on messaging apps.
Telegram said in a statement on Sunday that it complies with European Union law and that its moderation is “within industry standards and is constantly improving.”
“Telegram CEO Pavel Durov has nothing to hide and travels frequently to Europe,” the company said. “It is absurd to claim that the platform or its owners are responsible for misuse of the platform.”
Durov, a self-described libertarian who has often been referred to as “Russia's Mark Zuckerberg”, lives in Dubai, where Telegram is based, and holds French and UAE nationality.
He recently said he considered living in Berlin, London, Singapore and San Francisco before choosing Dubai, praising the city's business environment and “neutrality”.
Telegram has long been under close scrutiny by law enforcement agencies around the world due to suspicions that it is used for communication, recruitment and coordination by terrorist organizations, drug traffickers, arms dealers and far-right extremist groups.
In a rare interview with the Financial Times in March, Durov, who is worth more than $9 billion (£6.8 billion), said child abuse material and public calls for violence were “a red line” that Telegram would not cross.
But he also repeatedly touts the platform's minimal moderation policies and commitment to free speech, and boasts that his company employs just 30 full-time engineers.
Durov has largely avoided the public scrutiny faced by other tech chiefs, including Elon Musk and Mark Zuckerberg. He rarely gives interviews and prefers to show off his celibate lifestyle to his followers on Instagram, where he sometimes shares shirtless photos of himself. Last month, he revealed to his social media followers that he now has more than 100 biological children as a sperm donor.
Durov left Russia in 2014 after refusing to comply with Kremlin demands to shut down opposition groups on VK, the social network he founded at age 22. After a dispute with its Kremlin-linked owner, Durov was forced to sell VK and focus on Telegram, the app he founded with his brother Nikolai in 2013.
Russia tried to ban Telegram in 2018 but lifted all restrictions on the platform after Russian authorities said Durov was willing to cooperate in the fight against terrorism and extremism.
Durov has at times positioned himself as a Russian defector, but leaked border data seen by the Guardian showed he visited Russia more than 50 times between 2015 and 2021, rekindling speculation about his ties to the Kremlin.
Russian authorities have said Durov's arrest was politically motivated, a charge strongly denied by French President Emmanuel Macron.
Questions have also been raised about the timing and circumstances of Durov's detention, particularly whether he knew that Paris had issued an arrest warrant against him.
Le Monde reported that Durov met with Macron several times before receiving French citizenship in 2021 through a special procedure for those deemed to have made a special contribution to France.
The Wall Street Journal reported that Macron asked Durov to move Telegram's headquarters to Paris in 2018, but Durov rejected the idea.