But any decision to block the service would require a separate action by communications regulator Roskomnadzor and a court ruling, the lawyer said.
"The company considers it its obligation to protect the privacy of its users' correspondence", Akhmetgaliyev, who is representing Telegram in its dispute with the FSB at the Russian Supreme Court, told journalists on March 20. Telegram chose to not hand over this information in 2017, and as such, was fined $14,000.
Telegram, which is in the middle of an initial coin offering of as much as $2.55 billion, plans to appeal the ruling.
The messaging service Telegram can not comply with the Federal Security Service (FSB)'s demand that it share information on decoding users' messages, a lawyer for Telegram, Ramil Akhmetgaliyev, said.
The Russian Supreme Court ruled to dismiss Telegram's lawsuit on Tuesday, the Mediazona news website reported. "Telegram will stand for freedom and privacy", he wrote.
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Telegram could potentially be blocked from Russian Federation.
Also on Tuesday, Russian internet watchdog Roskomnadzor officially warned Telegram that unless it complies with the FSB and the court's orders, its work on Russian territory could be blocked.
At that time Roskomnadzor decided not to block Telegram, but in October 2017, a Moscow court fined Telegram 800,000 rubles (about 13,800 USA dollars).
"The FSB's argument that encryption keys can't be considered private information defended by the Constitution is cunning", says Ramil Akhmetgaliev, Telegram's lawyer.