This week is full of scandals as China revealed its biggest bank fraud in history, and now the founder of a Turkish crypto exchange has been arrested for scamming its users of millions.
Another day, another scam. The great bull market of 2021 allowed the creation of tons of projects in the crypto space, and as a result, many frauds were created as well. Now, as the recession is raging, many scams are revealed, which have a lot of consequences, like bankruptcies.
Faruk Fatih Ozer arrested in Albania
Faruk Fatih Ozer is the founder of Thodex, formerly a well-known crypto exchange in Turkey. Thodex users lost millions using the platform, but now they can celebrate as its founder has been arrested, and Turkish prosecutors sentenced him to 40,564 years in prison. What a day for Faruk Fatih Ozer. But, unfortunately, or fortunately, even if he behaved in the best possible way and got a shorter sentence, he is never getting out of the prison cell.
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Faruk reportedly left Turkey carrying more than $100 million in investors’ funds. Later, in April of last year, Turkey issued a global arrest order for him. Thodex crypto scandal is viewed as one of the most notable crypto scams in history. The founder of Thodex, who had also received a red alert from Interpol, was detained in Vlora. According to the Ministry, the extradition process to Turkey has begun.
Thodex became operational in 2017 but suddenly halted trading activities in April 2021. Reportedly, this was done because of “possible cyberattacks,” and he told clients that their funds were safe. Shortly after, Turkish police arrested more than 60 people linked to the company, seized the company’s computers and froze accounts. He went into hiding but was found just a little later than one year after the horrendous scandal.
It could have been different
Following the suspension of Thodex services last year, hundreds of thousands of customers were put in a distressing situation as they could not access their digital assets on the trading platform. Some claim that even before the company announced the suspension of its services, the Turkish investors who actively used the platform had doubts about it.
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Thodex was popular for its aggressive marketing campaigns to attract as many investors as possible. These campaigns included luxury cars and Turkish models, which proved effective. While clients were bringing money in, Thodex was sending an estimated 5,000 BTC to the Kraken exchange, according to blockchain intelligence firm Whitestream as shown in the tweet.
From August 2020 to February 2021, an estimated 5,000 BTC – $125,000,000 were sent from #Thodex Turkish exchange to @krakenfx, In what appears to be #Thodex cash out operation.
Sample transaction: 21cdff1c7611269b1dab8c66ce2714493dd13472aafa8f86d140409e2aa12401 pic.twitter.com/8gBYfiYgFY
— whitestream – Blockchain Intelligence (@whitestream5) April 29, 2021
Turkey is well-known for its high inflation rate, which was always between 10% and 20% but skyrocketed to the current 80%. The Turkish lira is rapidly depreciating in the long run and Turks have to look for alternatives as a result. Not even high interest rates tame inflation, so people put their savings in stocks, gold, other fiat currencies or crypto.
Every year, the value of their money shrinks due to high inflation, and thinking they could escape it thanks to a modern alternative known as cryptocurrency gave Turks a lot of hope and possibilities. However, they did not anticipate the founder of Thodex just taking the money and running away. Its president Erdogan already has a negative stance toward cryptocurrencies, and this event only intensifies the tension in the country.
The exact amount of dollars lost in this big crypto scandal differs throughout the internet, but it is clear it was millions. Scams like this should be a warning to investors to do more due diligence and not chase everything that gleams.
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