$2B crypto scam: Turkish exchange Thodex goes silent
Hundreds of thousands of users of a Turkish cryptocurrency exchange, Thodex, have been left unable to access their digital assets after the trading platform abruptly halted trading Wednesday, spurring fraud allegations and thousands of criminal complaints.
Thedox posted a statement on its website on Thursday saying
it would be closed for four to five days due to a sale process.
“Services will remain closed for about five working days
while the share transfer is completed, but users needn’t worry about their
investments,” it said.
Before the so-called explanation, the trading was the first
halt for “six hours planned maintenance work.”
But users who have not been able to withdraw their money or
access their accounts took to Twitter to voice concern that they may have been
scammed.
Having been operating since 2017, Thodex said “negative”
media reports about the company were not true. “Globally renowned banks and
funds, whose names we are going to announce when the agreement process is
completed, have been wanting to invest in our company and proposed a
partnership for a long time,” it said.
“For this process to be completed, transactions need to be halted
and the sale process needs to be completed."
Yet, preliminary assessment by police showed Thodex CEO
Faruk Fatih Özer had flown out of the country from Istanbul Airport on Tuesday
afternoon. He is said to have fled to Thailand with $2 billion worth of digital
assets. His shutting down all his social media accounts also fueled the
speculations on the fraud allegations.
Turkish security forces and persecutors immediately took
action to investigate the case, which left at least 390,000 users without
access to make transactions or withdraw their money. The Istanbul Security
General Directorate’s anti-cybercrimes unit conducted a search of the
exchange’s physical office located in the Kadıköy district on the city’s
Anatolian side.
The Istanbul Anatolian Chief Public Prosecutor's Office
announced on Thursday that it has launched an investigation against Thodex.
The statement made by the Chief Prosecutor's Office noted
that it has “initiated an investigation into the crypto money exchange called
Thodex and the alleged victimization of many citizens, and regarding the
determination of the acts that constitute a crime within the scope of the
aforementioned system and the legal intervention of the perpetrators,” ensuring
that the investigations are ongoing meticulously.
Separately, Abdullah Üsame Ceran, a lawyer, filed a criminal
complaint against Özer, alleging "aggravated fraud."
Ceran stressed that the platform has 400,000 members, of
which 390,000 are active in trading, and noted the platform is close to
withdrawal transactions currently.
He also said that there are some allegations on social media
platforms that Özer left Turkey on April 20 via Istanbul Airport.
As part of the complaint, the seizure of the platform's
assets, including vehicles, bank accounts, holdings and shares, was demanded.
2 million Dogecoin
The number of investors using the exchange increased rapidly
after it announced most recently that it will distribute 2 million Dogecoin, a
digital asset that was initially put on the market “as a joke,” but later saw
its value boosted by the statements of prominent names like Tesla boss Elon
Musk. It is known that the platform previously kicked off “such campaigns” as
well, including distributing luxury vehicles by drawing names.
The suspension on the website resulted in an immediate
outcry from users of the exchange, where daily trading volume tripled to over
$1.2 billion (TL 9.92 billion) from last Friday in just a week, according to
data published by coingecko.com, which tracks data on price, volume and market
capitalization on crypto markets.
Lawyer Oğuz Evren Kılıç said he was contacted by users on
Wednesday and that they had filed a criminal complaint on behalf of several
people in Ankara. He said thousands of others had also filed complaints across
the country. "It is not clear where this is headed. There have been
thousands of criminal complaints made in many places around Turkey," he
told Reuters, adding that the platform had 400,000 users, 391,000 of whom were
active.
Kılıç added that a preliminary assessment by police showed
Thodex CEO had flown out of the country from Istanbul Airport on Tuesday
afternoon.
"We will file a case with the consumer court right
away. The two processes – criminal complaints and the case – will run
simultaneously," Kılıç said.
Users have claimed that Özer may have taken their money used
for trading on the platform with him when he left the country.
The 24-hour trading volume on Thodex was $538 million on its
last trading day, according to Coinmarketcap.
Besides the thousands who flocked to the exchange’s Twitter
account, dozens of other complaints were made on a popular online forum for
consumer complaints, sikayetvar.com.
Saying they only want to close their account or withdraw
assets, many wrote that their investments are “stuck.”
The already growing boom in Turkey’s crypto market has
further gained pace over the recent period as investors joined a global rally
in Bitcoin, hoping to both gain from Bitcoin’s rally and shelter against
inflation, which climbed above 16% in March.
Earlier this month, the Central Bank of the Republic of
Turkey (CBRT) said it is banning the use of cryptocurrencies and crypto-assets
in payments for goods and services starting on April 30, citing that the level
of anonymity behind the digital tokens brings “irrevocable” damage and
significant transaction risks.
It said cryptocurrencies and other such digital assets based
on distributed ledger technology could not be used, directly or indirectly, as
an instrument of payment.
The move also prohibits companies that handle payments and
electronic fund transfers from processing transactions involving cryptocurrency
platforms.
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