Turkish Crypto Exchange Thodex Charged With $2 Billion Fraud

Hundreds of thousands of crypto traders in Turkey lose their funds after the exchange's CEO fled the country.

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Key Takeaways

  • The CEO of one of the largest crypto exchanges in Turkey Thodex is under criminal investigation.
  • The complaint alleges that the CEO had run away with customers' funds totaling over $2 billion.
  • The Turkish Police have detained 62 people linked with the exchange and issued detention warrants for 16 more persons.

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After initial reports of a “Turkish Mt. Gox” event, Thodex is now officially under criminal investigation for fraudulent activity totaling more than $2 billion.

Thodex CEO Denies Allegations

According to a report by a Turkish news agency, a criminal complaint was filed against Thodex’s 27-year-old CEO, Faruk Fatih Ozer. The complaint alleges that the CEO absconded with customers’ funds totaling over $2 billion.

Ozer has denied the allegations on his now-deleted Twitter account, claiming he was at a business meeting in Albania.

On Apr. 21, Thodex abruptly shut down all trading and fund withdrawals, blocked 391,000 users from accessing their funds.

Meanwhile, the Turkish Police have detained 62 people linked with the exchange and issued detention warrants for 16 others. The Financial Crimes Investigation Board (MASAK) is also investigating the fraud and has frozen all bank accounts linked with the exchange.

When its operations were halted, Thodex’s volume was about $ 585,513,644, as per data from CoinMarketCap.

As one of the country’s leading exchanges, Thodex has offered a convenient platform for investors looking to escape fast-rising inflation. After its national currency, the lira, dropped more than 50% in value since August 2018, Turkish citizens flocked to Bitcoin as a safe-haven asset.

The rate remains high, however. The lira battled a 16% inflation as of March 2021.

TRY-USD Price Chart
Turkish Lira against the U.S. Dollar since May 2017. Source: Trading View

Crypto trading volumes in Turkey for February and March were recorded above $26 billion.

Nevertheless, the government has expressed opposition to the asset class, claiming “irreparable” damage and economic risks. Events like that of Thodex only strengthen the government’s views.

This opposition has manifested itself in a law which bans the use of cryptocurrencies as payments. It goes into effect on Apr. 30.

Disclosure: The author does not hold the cryptocurrency mentioned in this article at the time of publication.

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