ISTANBUL (AFP) – Turkish prosecutors on Thursday (April 22) launched an investigation after the Istanbul-based founder of a cryptocurrency exchange froze trading and fled the country with a reported US$2 billion (S$2.7 billion) in investors’ assets.
The Thodex exchange suspended trading after posting a mysterious message on Wednesday saying it needed five days to deal with an unspecified outside investment.
Turkish security officials then released a photo of Thodex founder Faruk Fatih Ozer going through passport control at Istanbul airport on his way to an unspecified location.
Local media reports said Ozer – reported to be 27 or 28 years old – had flown either to Albania or Thailand.
Thodex went dark after running a promotional campaign that sold Dogecoins at one-fourth the price at which they were trading on other exchanges.
But the exchange locked in those investments and did not allow the coins to be either sold or converted into other cryptos.
“Why don’t you allow my coins to be transferred?” Dogecoin investor Kaya Dinar asked Thodex in one typical tweet from a worried crypto trader.
Reports said the website and the entire exchange had shut down while holding at least US$2 billion from 391,000 investors.
“There has been no access to Thodex website for more than 24 hours. Hundreds of thousands of users cannot get access to wallets holding their crypto assets or cash money,” investors’ lawyer Oguz Evren Kilic told AFP.
“We have started the legal procedures and lodged a complaint at the prosecutor’s office,” he said.
‘Aggravated fraud’ probe
Turkey’s private DHA news agency said prosecutors were investigating the businessman on charges of “aggravated fraud and founding a criminal organisation”.
Several police vans were seen parked outside the Thodex office on the Asian side of Istanbul on Thursday afternoon.
The Thodex website re-emerged after going dark on Wednesday to state that “we kindly inform you that the negative news on the internet does not reflect the truth”.
But it shed no more light about Ozer’s location or why trading had been stopped.
The attorney Kilic said Turkish officials had confirmed to him that Ozer had fled the country but were still trying to determine his whereabouts.
“The process will continue in court. One would hope that (Thodex) takes positive steps and the problem is resolved quickly, but the situation is getting grave each passing minute,” Kilic said in a phone interview.
The news about Thodex had unexpected political ramifications when a picture emerged on social media of a man resembling Ozer sitting in a room with the son of a right-wing party politician and Foreign Minister Mevlut Cavusoglu.
“I don’t know Thodex’s founder Faruk Fatih Ozer,” Cavusoglu tweeted on Thursday.
Cavusoglu said the picture was taken when the man resembling Ozer accompanied the MHP party’s MP Saffet Sancakli’s son to a scheduled meeting in December 2019.
Aggressive campaigns
Thodex has launched aggressive campaigns to lure investors before Ozer went missing and shut down the exchange.
It had first pledged to distribute luxury cars through a flashy advertising campaign featuring famous Turkish models.
The platform then launched its Dogecoin drive.
The cryptocurrency is getting particularly popular among Turks who are looking to preserve their saving in the middle of a sharp decline in the value of the local currency, the lira.
The Turkish crypto market remains unregulated despite growing scepticism from President Recep Tayyip Erdogan’s government about the safety and use of digital currencies.
The Turkish central bank has decided to ban the use of cryptocurrencies in payments for goods and services starting from April 30.
It warned that cryptocurrencies “entail significant risks” because the market is volatile and lacks oversight.
“Wallets can be stolen or used unlawfully without the authorisation of their holders,” the central banks warned last week.
