Faruk Fatih Özer created the now-defunct cryptocurrency exchange, Thodex, which was situated in Turkey. Of the 40 cryptocurrency exchanges operating in Turkey at the time, Thodex was the first international exchange with a Turkish basis and one of the major ones. When it stopped in April 2021 with 391,000 users, the proprietor escaped Turkey with the money from the customers.
Background
In 2017, Thodex was established as Koineks, becoming Turkey’s fourth cryptocurrency exchange at the time. They installed the first Bitcoin ATMs in Turkey. In March 2020, Koineks changed its name to Thodex and went worldwide. Thodex received a money service business license from the Financial Crimes Enforcement Network in the same year (MSB). As of November 2020, Thodex has a $3 daily transaction volume. The exchange ran some incentive programs to entice new investors and users. The last of these rewards programs took place from 15 March to 15 April 2021. In a Dogecoin incentives campaign, it was promised that 2 million coins will be given out, 150 for each new sign-up. This campaign was launched in the month leading up to April 20, also known as Dogeday among Dogecoin supporters, when they anticipated a major price increase for the cryptocurrency. Due to the buzz, Dogecoin accounted for more than half of all trade on the exchange.
Thodex suspends business
Users saw minor transactional interruptions on April 19. Following complaints, Thodex claimed that the problems were caused by a cyberattack on the exchange, and on April 20, all trading on Thodex was suspended. Users were reassured by Thodex in a statement that operations would return to normal in 4-5 days and that trading had been temporarily suspended because “big-name banks” were interested in substantially investing as partners of the exchange and they needed to temporarily halt trading for the partnership to settle. The owner of the exchange Faruk, traveled to Tirana, Albania, in the interim while carrying $2 billion in cryptocurrencies.
Thodex’s theft
Public prosecutors launched an inquiry into customer complaints on April 22. After finding that Thodex users could not access their cash and confirming that Faruk had departed Turkey, financial crimes agents seized all of Thodex’s assets. There are arrest warrants out for Faruk and 81 other individuals. All suspects were detained by the Cyber Crimes Directorate except Faruk, including Father’s two brothers. The next day, an Interpol Red Notice was issued for Faruk. The owner is the subject of a fraud investigation by the Istanbul Public Prosecutors Office, and Thodex is the subject of an inquiry into tax crimes and violations of the Consumer Protection Law. Additionally, the prosecutors asked that the Cyber Crimes Directorate get in touch with overseas exchanges to find out whether Faruk had transmitted Bitcoins to their Binance address and, if so, if those funds may be blocked or seized.
Prosecuting the creator of Thodex
The Anatolian Civil Court convened the first hearing for a victim of the frozen transaction in May. They filed a lawsuit against Thodex for stealing and utilizing deposits in violation of the user agreement. According to reports, the Public Prosecutors office in 2022 obtained specific receipts that demonstrated that Faruk had made amends to some of the victims out of regret. However, 21 of the accused, including Faruk, were charged with three distinct offenses and might be sentenced to a total of 40,564 years in jail. The accused were found guilty by the court of converting the money of their customers into gold and cryptocurrencies and of luring their victims with false advertising. On August 30, 2022, the Turkish Interior Ministry made public Faruk Faruk’s arrest. He had been captured by Albanian officials at Vlor.
Aftermath
Following the failure of Thodex, Turkey, which had no laws governing cryptocurrency exchange activities, began to look at measures to regulate cryptocurrencies, and new laws were passed in 2021.
