Judge Alla Nazarova rejected Telegram's appeal against the country's Federal Security Service, known as the FSB, the successor to the KGB spy agency, which asked the company last year to share its encryption keys. Bloomberg reported.
Telegram refused to comply at the time and earned a fine of US$14,000. The communications regulator, Roskomnadzor, gave the company 15 days to provide the encryption keys.
Its lawyer Ramil Akhmetgaliev said Telegram now planned to appeal the ruling which may take a few months. He added that any move to block Telegram in Russia would require a separate court order.
Threats to block Telegram unless it gives up private data of its users won't bear fruit. Telegram will stand for freedom and privacy.— Pavel Durov (@durov) March 20, 2018
The FSB told the court that the encryption keys would, in themselves, not violate users' privacy and that obtaining the content of any message would require a further court order.
Bloomberg cited the research agency Mediascope as saying that Telegram had more than 9.5 million Russian users. The company is in the midst of an initial coin offering, having raised US$850 million from investors in February.
The current ICO aims to raise US$1.7 billion to build a blockchain network with an inbuilt cryptocurrency known as Gram to enable transactions that are faster than bitcoin.