62 arrests in the scandal surrounding the Turkish crypto exchange

The Turkish trading platform for digital currencies Thodex is closed, thousands of investors cannot get their money. The operator is on the run – and appeased.

“Bitcoin coins” on a large Turkish bazaar

Dhe scandal surrounding the closure of one of the largest local trading platforms for digital currencies rocked Turkey. The Thodex platform, which was used to conduct business worth several hundred million dollars every day, has not been accessible since Thursday. Your founder and managing director has gone abroad. The Turkish financial regulator blocked all business accounts of the crypto exchange, on which 391,000 customers are said to have actively traded. They no longer have access to their accounts. The amount of possible damage is unclear. Turkish media speculate on up to 2 billion dollars. The prosecution has issued 78 arrest warrants, according to the state news agency Anadolu. The police searched the operator’s premises in Istanbul and arrested 62 people.

According to a message published on the Thodex website, platform founder Faruk Fathi Özer is reportedly negotiating with international investors. The 27-year-old was last seen at Istanbul airport on Wednesday evening, the police suspected him in Albania. Reports that 391,000 customers were affected and up to $ 2 billion disappeared were wrong, according to the Thodex website without naming an author. Investors’ worries are unfounded and trading is only temporarily interrupted. But there are problems with 30,000 accounts after a hacker attack.

There are calls for stronger regulation

Thousands of potentially injured persons do not trust the insurance companies and have filed complaints against Özer across the country, lawyers report. There were calls for greater regulation of digital currency trading venues. Cemil Ertem, an economic advisor to President Recep Tayyip Erdogan, told Bloomberg news agency that the government must act “as soon as possible” to prevent “pyramid schemes”. Strict regulations are essential.

Just a week ago, the Turkish central bank had banned payments with crypto currencies in the country from April 30th. Trading and paying with digital money would present “significant risks” and possibly lead to “irreparable” damage. Digital currencies are not regulated and are not subject to the supervision of a central bank, she argued. The news is also likely, like the latest announcement of high taxation from America, that crypto currencies have lost a lot of value.

The Turkish ban and the alleged bankruptcy of the Thodex platform also shed light on the special situation in Turkey. The high demand for crypto currencies there is also associated with the latent weakness of the local currency, the lira. The inflation rate is 16.2 percent, the lira is currently depreciating sharply because the markets do not believe in the decisive fight against inflation, even if they have often been promised, and recurring layoffs at the top of the central bank do not strengthen confidence. On Friday a dollar cost 8.35 lira, the day before it was only 8.20, the euro shot back to a level of 10 lira for the first time since the crisis last November. Many Turks prefer to keep their reserves in dollars and euros, precious metals or, more recently, increasingly in crypto currencies such as Bitcoin or Ethereum.

According to data from the analysis platform Coinmarketcap, the Thodex exchange had turned over 538 million dollars on the last trading day. According to Coingecko.com, the volume of all cryptocurrencies traded in Turkey was $ 1.2 billion on Friday last week, three times as much as in the previous week. Thodex operator Özer only fueled demand in March by promising to distribute 4 million “Dogecoins” free of charge to new customers. However, there are many complaints on social media that this never happened.