Turkey, massive cryptocurrency fraud in Thodex trading platform

Almost 100 arrested in Turkey for massive cryptocurrency fraud

The owner of the cryptocurrency trading platform Thodex fled Turkey with $2 billion. The money of 390,000 investors is “irrecoverable”.

Turkey’s police detained at least 62 people in raids across 8 provinces of the country related to massive fraud on a cryptocurrency trading platform, and authorities issued an international arrest warrant against its founder, Faruk Fatih Özer, who allegedly had fled the country with $2 billion from investors.

According to Turkish media, the prosecution has issued arrest warrants for at least 16 more people for links to the platform. The operation came after thousands of Turkish citizens have filed lawsuits in court against the Thodex company, chaired by Özer, claiming that they have been scammed and cannot access their accounts.

As part of the investigation, Turkish police teams searched the company’s Istanbul headquarters and confiscated the computers and digital stuff. The Turkish press reported that Istanbul police believe Özer left the country on Tuesday and flew to the Albanian capital Tirana. Interpol would have already issued an international arrest warrant of the highest priority against the Turkish businessman at Ankara’s request.

Özer is accused in Turkey of “fraud using computer systems, banks or credit institutions as tools”, as well as “creating a criminal organisation”, as documented by the Istanbul prosecutor’s office. Turkish security forces yesterday published a photo taken of Özer, who is about 27 years old, as he was going through passport control at Istanbul Airport to an unknown destination, which could be Albania.

The money of 390,000 investors is “irrecoverable”

The cryptocurrency trading platform Thodex, used to trade cryptocurrency worth millions of dollars daily, reported yesterday through its website that it would remain closed for 4 or 5 days due to a sale process, and Özer himself assured yesterday via his company’s Twitter account that “unsubstantiated accusations” have been made against him.

Özer affirmed that his trip abroad was because he was going to hold meetings with foreign investors, adding that he would return to Turkey “in a few days” and that he was willing to “cooperate with the judicial authorities so that the truth can come to light.” Although he admitted that his company Thodex has temporarily suspended cryptocurrency transactions due to unusual activity, that he linked to a possible cyberattack.

The opinion of hundreds of thousands of investors who cannot access their funds is very different, and thousands of them have already filed complaints for alleged fraud. The Istanbul prosecutor’s office launched an investigation against the platform yesterday, a day after the Turkish Financial Crimes Investigation Office (MASAK) blocked the company’s accounts due to the numerous complaints.

The extent of the alleged fraud is not yet clear, but the total value is estimated to be around $2 billion in defrauded assets. A lawyer for the victims told the Turkish press that the money invested in Thodex by 390,000 users of the platform is “irrecoverable“. “Hundreds of thousands of users cannot access their digital wallets. The situation will become more worrying unless action is taken,” he warned.

Several massive cryptocurrency scams in Turkey

High inflation rates and the devaluation of the Turkish lira have led many Turks to invest in cryptocurrency: almost 1 in 5 Turks claim to have investments in cryptocurrency, twice the European average. Last week, the Turkish Central Bank announced precisely that it has prohibited the use of cryptocurrency to buy goods, warning that the use of cryptocurrencies “carries significant risks” due to its volatility and lack of control.

This is not, however, the first case of such a scam in the Eurasian country. The high demand for cryptocurrency in Turkey has led many unscrupulous entrepreneurs to promote pyramid schemes, as was the case with the so-called Turkish cryptocurrency Turcoin, which in 2018 ruined hundreds of investors.

Another massive fraud case in Turkey in which the use of cryptocurrencies was also implicated was that of the so-called Çiftlik Bank: a kind of Turkish FarmVille in which players’ money was allegedly invested in real goods, promising unrealistic profits of 40%. That pyramid scheme ended in a massive scam, in which 80,000 investors lost their money and its creator fled to Uruguay with 100 million euros.