Compass Money: Turkish Authorities Raid Bitcoin Exchange

Turkey has been cracking down on Bitcoin due to concerns about its instability. (Wikimedia Commons)

Turkish authorities raided Thodex, a bitcoin trading index, on April 23. The exchange stopped operations last week among accusations of fraud from Turkish citizens. 

The police arrested more than 60 people during simultaneous raids in eight Turkish cities; however, Faruk Fatih Ozer, the leader of Thodex, fled Turkey for Albania. Turkish state media estimates that he escaped with more than $2 billion from investors.

Ozer has denied any allegations of fraud and claims to be in Albania for work meetings. The Turkish Justice Ministry is currently working on extraditing him from Albania. 

Interpol issued a red notice for Ozer’s arrest on April 23 as per a request from Turkish authorities. 

Issues with Thodex began on April 21 when users expressed complaints on social media sites about being unable to access their accounts or withdraw money. The company claimed on April 22 that they had temporarily closed due to a sale purpose and suspended trading. That same day, Turkey’s Financial Crimes Investigation Board (MASAK) announced that they would block the company’s accounts and begin investigating their actions. 

Turkey’s government has had a difficult relationship with Bitcoin. Last week, the Turkish Central declared that as of April 30, the use of Bitcoin to pay for goods and services would be prohibited. 

The Central Bank cited significant risks such as the lack of regulation of Bitcoin, potential for illegal activity, and the currency’s volatility as reasons for the ban. 

Thodex is one of two major Bitcoin exchanges to collapse this week. Vebitcoin, the fourth-largest exchange in Turkey, stated on April 24 that it would halt operations “in order to fulfill all regulations and claims." Turkish authorities claim to have arrested four people on charges of fraud. 

Bitcoin has become an increasingly popular option for Turkish investors as the local currency, the lira, is often seen as volatile and unpredictable. Turkey frequently experiences high inflation rates, and over the past year, the lira lost a quarter of its value against the dollar. 

Sahap Kavcioglu, the Central Bank chief, has said that the bank is planning more regulations in the future. “We are working on regulations in terms of cryptocurrency… There are disturbing money outflows to outside of Turkey via cryptocurrencies,” Kavcioglu stated.