This is such a misrepresentation. Telegram could at-will feed the cloud-2FA password to password hashing function like Argon2 to derive a client-side encryption key. Everything could be backed up to the cloud in encrypted state only you can access. Do they do that? No.
So it's not as much as trade-off, as it is half-assed security design.
So it's not as much as trade-off, as it is half-assed security design.