Turkey probes cryptocurrency exchange for possible $2B fraud

Turkey’s budding crypto-assets  market is reaching puberty, with the first scam being unaired today. Turkish prosecutors launched an investigation into a cryptocurrency exchange Thursday over allegations it may have defrauded some 390,000 investors of an estimated $2 billion.  Thodex owner Mr Faruk Fatih Özer issued a declaration from aboard where is “for business reasons”, claiming his company’s accounts are transparent and reflect the true state of its financial conditions, wowing that no investor will be harmed.


The office of Istanbul’s chief prosecutor said it was probing the Thodex cryptocurrency exchange following complaints from users who could not access their assets.


Thodex owner Faruk Fatih Ozer deactivated his social media accounts and is believed to have fled Turkey on Tuesday, Turkish broadcaster Haberturk reported. There was no information on his current whereabouts. According to Turkish wire service DHA, he may be currently in Albania.


Ozer could face possible charges of fraud and forming a criminal organization, Haberturk said, adding that a police cybercrimes unit searched Thodex’s Istanbul offices on Thursday.


Earlier in the week, Thodex notified users that it would halt operations for six hours for maintenance and later extended that period to 4-5 days.


Last week, Turkey’s central bank announced that it was banning the use of cryptocurrencies for the payment for goods, saying they presented “irrevocable” risks.


The decision came as many in Turkey have turned to cryptocurrencies to shield their savings from rising inflation and the Turkish currency’s slump.


Turkey’s FATF, or Financial Crimes Unit froze Thodex’s  custody accounts in all other exchanges pending a probe into Faruk Fatih Ozer’s dealings. Turkish media accounts claim Ozer dumped $500 mn worth of Dogecoin below market value before he absconded.


PA Turkey claims this is the first of many crypto-scandals in Turkey, where the low level of financial literacy coupled with a zest for financial gambling creates the perfect atmosphere for scam artists to milk the gullible.


In another recent case, a junior high graduate, Mr Mehmet Aydın, called “Fat Calf”  launched a virtual bank, called the Farmbank, collecting an estimated TL1 bn from thousands of  savers  to launch a new game similar to Farmville. He is believed to be in Uruguay or Paraguay.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.