The Turkish head of the crypto exchange is missing and allegedly takes $ 2 billion in investor money

A visual representation of the cryptocurrency Bitcoin on November 21, 2020 in London, England.

Jordan Mansfield | Getty Images

LONDON – A Turkish cryptocurrency exchange is offline and its CEO has reportedly gone missing. Thousands of investors fear that their funds have been stolen.

Thodex, a Turkey-based crypto platform, said its platform has been “temporarily closed” to address an “abnormal fluctuation in corporate accounts,” according to a translated statement on its website.

According to local media reports, Faruk Fatih Ozer, the founder of Thodex, flew to Albania and took away $ 2 billion in investor money. The Demiroren news agency published a photo of Ozer leaving Istanbul Airport.

A lawyer filing a criminal complaint against Ozer said Thodex had 400,000 users, of whom 390,000 were active. However, Ozer has denied the allegations, claiming that the situation only affected 30,000 users and that reports of approximately $ 2 billion in losses were “unfounded”.

According to the Anadolu agency, the Turkish authorities have now issued an international arrest warrant against Ozer. The police have arrested 62 people in eight cities, including Istanbul, the state news agency said.

Thousands of Thodex users have filed complaints against the company. Investors say they cannot access their accounts and fear that their savings will be irretrievable. Some Turkish citizens have turned to crypto to protect their savings from skyrocketing inflation and the weakening of the Turkish lira.

According to Bloomberg, Thodex offered new registrants millions of free Dogecoins last month. According to the exchange, 4 million of the meme-inspired crypto tokens were distributed, but many users say they did not receive them.

Thodex wasn’t immediately available for comment when CNBC contacted him on Twitter.

Crypto raid ahead?

It’s a reminder of the regulatory uncertainty surrounding the crypto industry. Although some countries are putting in place rules aimed at bringing crypto companies under their supervision, the industry lacks the level of scrutiny seen in more established financial markets.

In 2019, Canadian crypto exchange QuadrigaCX went bankrupt following the death of its CEO, which resulted in millions of dollars worth of digital assets being locked in a digital wallet.

The Central Bank of Turkey recently banned the use of cryptocurrencies for the purchase of goods and services. President Recep Tayyip Erdogan has called for rapid regulation and warned of “pyramid schemes” appearing on the crypto markets.

Meanwhile, the UK financial services watchdog warned in January that crypto investors should be “ready to lose all their money” because of the “very high risks” involved.

Bitcoin and other cryptocurrencies are decentralized, which means that they are not controlled by a single person, but rather by a computer network. The whole idea of ​​Bitcoin was originally that people should be their own bank and hold money outside of the traditional financial system.

However, crypto investors believe the industry has matured significantly over the years. Bitcoin’s price has increased more than sixfold in the past 12 months, even after a sharp drop in prices recently. And bitcoin bulls hope that the entry of institutional investors and companies like Tesla will help bring cryptocurrencies into the mainstream.

Still, the volatility of digital currency prices and possible regulatory pressures are a major risk for the industry. Jesse Powell, CEO of the US stock exchange Kraken, told CNBC earlier this month that he believed that cryptocurrencies “could be cracked down”.

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