More than a year after suspected investor fraud amounting to billions, the head of the Turkish cryptocurrency trading platform Thodex has been arrested in Albania. report that Albanian and Turkish media. 28-year-old Faruk Fatih Özer was the founder and CEO of the platform, which allowed cryptocurrencies such as Bitcoin, Ethereum and Dogecoin to be traded. According to Turkish media reports, the stock exchange was the third largest such platform in Turkey in 2021 with around 400,000 customers. On April 20, 2021, Özer fled Istanbul to Albania after allegations of fraud against him and his platform. The Turkish public prosecutor had asked for help in the search for Özer via Interpol. He has denied the allegations.
In mid-April 2021, owners of the Dogecoin cryptocurrency initially complained that they could no longer withdraw their money from Thodex. At the time, the company said it was carrying out maintenance work – but the timing was already suspicious. The digital currency had broken the previous all-time high just a few days before. Shortly thereafter, Thodex suddenly announced that it was in negotiations with a foreign investor and had stopped all transactions on the platform to facilitate analysis by the potential buyer.
Make a run for it instead of maintenance work
The Turkish prosecutor believes that these were just diversionary maneuvers. She accuses Özer and 20 other employees of serious fraud and the formation of a criminal organization. Customers were deliberately deceived. Thodex advertised its product with Turkish celebrities to attract customers to the platform and keep them there. At the same time, the company transferred customers’ deposits to other platforms or exchanged them for gold, which indicates planned fraud. Such an approach is known in the cryptocurrency scene as a “rug pull” or “exit scam”. The operators of a platform disappear with the deposits of the users. Maintenance work or hacker attacks are often used as a reason why payouts are not possible for a while.
How much money the platform actually embezzled is unclear. Analysis firm Chainalysis had in February wrote of a damage sum of around 2.6 billion dollars. However, only around 2,000 of the alleged 400,000 victims had joined the prosecution in Turkey. According to the public prosecutor, they had invested a total of 356 million Turkish lira on the platform, which would currently be around 20 million euros.
Like many countries, Turkey had experienced a crypto boom between 2020 and 2021. In the week before the Thodex founder fled, trading volume on Turkish crypto platforms had skyrocketed according to a Bloomberg report reached more than a third of the trading volume with stocks. Many Turks also wanted to use the investment to protect themselves against high inflation. Between 2018 and 2021, this averaged around 15 percent per year.