Crypto Takes Another “L” as Turkish Exchange Founder Runs With $2bn in User Funds

Faruk Fatih Ozer, the founder of the Turkish crypto exchange Thodex, is reportedly on the run with billions of dollars of users’ funds. Reports claim the exchange website shut down on Wednesday, with a message saying trading was suspended due to an “unspecified outside investment.”

Many Turks had turned to crypto as a lifeline following the Lira’s plunging valuation. In response, the central bank moved to ban Bitcoin and other cryptos in payment for goods and services. But Ozer’s disappearance has intensified calls for an even greater crackdown.

Crypto in The Spotlight After Founder Goes Missing

Turkish authorities are on the lookout for Ozer after he fled the country with a reported $2 billion. Officials have released a photo of the suspect going through passport control at Istanbul airport. Media reports say he may have flown to either Albania or Thailand.

The Thodex crypto exchange was running forceful promotions, presumably to entice deposits in the run-up to Ozer’s disappearance. Local media talks about one such promotion in which the firm sold Dogecoin below market value. A condition of the promotion was that investors could not sell straight away.

Victims of the exit scam are filing complaints at their local prosecutors’ office. But given the unregulated nature of crypto exchanges in general, many fear their funds are lost.

Prosecutors have issued arrest warrants for 78 people. So far, 62 have been detained in an operation stretching eight Turkish provinces.

Thodex issued a statement saying adverse reports about them are untrue. They maintain that the website is down because banks and other partners had expressed an interest in investing in them.

Following the website shutting down mid-week, users took to Twitter to express concerns that their funds were inaccessible. Even at that early stage, some suspected they had been scammed.

Turkey Bans The Use of Cryptocurrency

Last week, Turkey’s central bank issued an order to ban the use of crypto in payment for goods and services. The action was a response to a rise in Turkish citizens turning to cryptocurrency to hedge against spiraling inflation and the effects of the Lira’s decline.

The bank said this was necessary as crypto presents a risk from lack of regulation and extreme volatility. The restrictions will come into effect at the end of this month.

“neither subject to any regulation and supervision mechanisms nor a central regulatory authority. Their market values can be excessively volatile.”

Many had panned the move citing government overreach. But Ozer’s disappearance will undoubtedly give Turkish President Recep Tayyip Erdoğan fuel to back up his mandate.

With that, attention is once again back on crypto exchanges. While the term, not your keys, not your coins is prevalent, victims only realize this when it’s too late.