Users of Turkish crypto exchange Thodex have filed a fraud complaint after being unable to withdraw hundreds of millions of dollars.
Lawyer Oguz Evren Kilic, who represents several Thodex users, has officially filed a legal complaint. Users of the crypto exchange claim they have been unable to withdraw their investments. As Thodex has roughly 390,000 active users, Kilic said that potential losses could be hundreds of millions of dollars. According to the state-run Anadolu Agency, a prosecutor in Istanbul has also launched an investigation.
Thodex CEO and founder Faruk Fatih Ozer has reportedly been unresponsive during this period, not replying to multiple phone calls. Kilic says that Ozer fled the country on April 21 on a commercial flight from Istanbul. The Demiroren News Agency published a photo that they allege to be Ozer in an airport in Albania.
Thodex’s suspension of operations
The outcry comes as Thodex announced on April 21 that it had suspended operations due to a “partnership offer.” According to an undated statement on its website, the exchange said it is courting external investment to serve its clients better. It also said users shouldn’t worry about their investment, as services will only remain shut for five working days.
In light of the controversy, government officials are calling for tighter regulations of cryptocurrencies. Cemil Ertem, the senior economic adviser to President Recep Tayyip Erdogan, said the government should take action as soon as possible. “Pyramid schemes are being established in this area,” Ertem said. She elaborated further:
“Turkey will undoubtedly carry out a regulation that’s in line with its economy but also by following global developments.”
Crypto ban in Turkey
As the Turkish government determines how to regulate cryptocurrencies, the country’s central bank has already taken a drastic step. On April 16, the Central Bank of Turkey officially announced the ban of cryptocurrencies as payment instruments.
Turkish financial authorities claim that cryptocurrency assets are “neither subject to any regulation and supervision mechanisms nor a central regulatory authority.”
As a consequence, officials assert that cryptocurrency transactions and payments have the potential to present non-recoverable losses for the parties involved. Situations like the current one with Thodex are likely ones they are trying to avoid. The ban will officially go into effect on April 30, 2021.
In the afternoon of April 22, a statement was released on the website of Thodex concerning recent events. According to the statement, the crypto exchange has been in partnership negotiations for 3 months. Last week, they detected “an abnormal fluctuation in the company accounts,” which prompted them to close the exchange temporarily.
The statement appears to be written by Ozer, who said that while the company’s technical team was researching the abnormality, he “personally went abroad on 19.04.2021 to make final meetings with foreign investors.”
Ozer goes on to say that the claim he lost his investors’ money is unfounded. Additionally, he said he would be returning to Turkey in a few days to cooperate with judicial authorities and would “do [his] best to make every effort to prevent the victimization of users.” He concluded:
“I kindly submit to the public’s knowledge that the smear campaign against both myself and my company should not be respected.”