Turkish Crypto Exchange Boss Flees Country Amidst $2bn Fraud Probe

Turkey has detained dozens of people in a probe into one of the country’s biggest cryptocurrency trading platforms, and sought the company’s founder’s arrest in Albania, following allegations of massive fraud.

Estimates of how much money was at stake in the probe of the Thodex trading platform varied considerably, with the Haberturk newspaper saying losses could be as high as $2 billion (£1.4bn).

A lawyer for those affected said about 390,000 active users were involved, but Thodex chief executive Faruk Fatih Ozer said in a statement that only 30,000 accounts were involved.

Thodex had handled hundreds of millions of dollars in trade daily, with 24-hour trading volume at $538m on the company’s last trading day before it abruptly halted operations last Wednesday, according to Coinmarketcap.

‘Aggravated fraud’

Turkey’s chief public prosecutor’s office said it was taking action against Thodex for “aggravated fraud” and for “establishing a criminal organisation”.

Authorities believe Ozer fled to Tirana, Albania, on Tuesday evening, according to the Milliyet newspaper and other Turkish media reports.

Ozer said the company lacked the financial resources to continue operating, and promised to return to Turkey after repaying investors, according to a statement published by Bloomberg.

“The day I repay all my debt, I will return to my country and give myself in to justice,” Ozer said in the statement.

A previous statement on Thodex’s website said allegations of fraud were “unfounded” and that the company would resume operations within a few days.

The earlier statement said Thodex was considering partnership offers and that Ozer had gone abroad to meet with foreign investors.

Arrests

Police launched raids at 6 a.m. across eight Turkish provinces on Friday with warrants to arrest 78 suspects, following a Thursday raid on the company’s Istanbul head office. Milliyet reported they had arrested 62 of the 78 people sought.

Interpol issued a red notice for Ozer’s arrest on Friday morning after a request by the Turkish government.

Turkey’s financial crimes investigation board MASAK blocked the company’s accounts on Wednesday and began an investigation, Reuters reported.

Thodex’s apparent collapse came days after Turkey said it would ban the use of crypto assets for payments, citing the potential for “irreparable” damage and transaction risks.

The move was one of the factors triggering a cryptocurrency sell-off last week that erased $200bn from the market capitalisation of cryptocurrencies as a whole on Friday alone.

Turkish investors have flocked to Bitcoin and other cryptocurrencies in recent months as a hedge against the country’s high inflation rates and financial instability.