Collapsed Turkish Crypto Exchange Thodex’s CEO Faruk Özer Extradited, Arrested in Istanbul: Report

In the expanding world of cryptocurrency, fortunes are made and lost quickly. A Turkish cryptocurrency exchange, Thodex has captured the attention of industrialists. Thodex, initially known as Koineks, stepped into the crypto world with ambitious dreams of becoming a giant. The exchange was founded by Faruk Fatih Özer, who was willing to sky-rocket the operations after getting appreciation.

After the crypto market witnessed a meteoric rise, doubts and concerns of investors also started rising. Complaints of transaction disruption started emerging in  2019 after the emergence of Dogecoin. The turbulence intensified after Faruk Özer left Turkey and fled to Albania.

Two years after his hasty departure, Faruk was apprehended in Albania in August 2022. He was then taken to Turkey in April 2023, where he and his siblings were sentenced to 11,196 years.

Background on Thodex Exchange

Thodex is a Turkish-based cryptocurrency exchange that is a rebranded version of Koineks. Founded by Faruk Fatih Özer, Thodex has been accepting U.S.-based investors due to its FinCen Money Services Business (MSB) licence. The platform allows trading with a competitive withdrawal fee.

In 2020, Thodex was licensed by the Financial Crimes Enforcement Network with a total transaction volume of $3 billion. After the release of Dogecoin, users started complaining about the disruptions in transactions. After this, Fatih Özer left Turkey with around $2 billion in cryptocurrency.

Investor Reactions and Concerns

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Faruk Fatih Ozer, who ran crypto exchange Thodex until it imploded in 2021, was sentenced to 11,196 years in prison by a Turkish court for crimes including fraud. #SAMA28 #mashnotpotatoes #news #fypシ #tiktoksouthafrica🇿🇦

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After CEO Faruk Fatih Özer fled to Albania, he ceased all the operations on Thodex in April 2021. Since the crypto market is not fully administrable, investing in it has fair risks. The collapse of the exchange left the users concerned about their investments.

The total amount of the investments lost remains unclear. However, according to Bloomberg, it was estimated that over 400,000 users were left at stake, with around $2 billion in holdings. The Thodex attorney stated that Thodex’s assets declined when too many users demanded their money back. Investors worldwide are demanding a comprehensive structure to ensure compliance of exchanges, which you can read here.

Extradition and Arrest of Faruk Özer

Thodex CEO Faruk Özer was detained in Albania two years after leaving Turkey in August 2022. Recently, in April 2023, he was extradited to Turkey as well. Before getting deported, Özer was already imprisoned over fraud and money laundering charges.

Istanbul’s Anatolian 9th High Criminal Court court sentenced Özer and two of his siblings to 11,196 years and 10 months in prison. They were charged guilty of leading a criminal organisation, money laundering and fraud. Along with the lifetime of prison, they were also fined $5 million.

Thodex Case in the Global Context

The Thodex case doesn’t only affect the Turkish industry. When it comes to digital currency, it also threatens international scrutiny. Recently, CoinEx also faced loss due to hacking, as mentioned in https://player.me/coinex-faces-massive-hack-that-digital-assets-was-stolen/.

The CoinEx and Thodex cases have gained cross-border attention. They have become hot topics in the global cryptocurrency market. The downfall of a cryptocurrency exchange raised questions about the balance between innovation and regulation in the crypto sector.

Legal Proceedings and Investigations

During his first appearance in court, he claimed that his cryptocurrency exchange, Thodex, went bankrupt. His company never has a criminal record. He declared himself and his family as victims of injustice.

His court statement read, “I am smart enough to manage all institutions in the world. This is evident from the company I founded at the age of 22. If I were to establish a criminal organisation, I would not act so amateurishly.”

Impact on Cryptocurrency Regulation in Turkey

Usually, in Turkey, cryptocurrencies were embraced to prevent the soaring inflation and depreciation of the native currency, the Lira. But after the downfall of the Thodex exchange caused a significant upheaval in Turkey.

This event can have a palpable impact on the adoption of digital currency among the masses. It has also raised questions about the need to regulate the significant measures within the cryptocurrency sector. Turkish financial authorities are pressurised to establish clear guidelines for the industry.

Future of the Thodex Case

Thodex growth was no doubt splendid. It used to have a substantial user base. However, after the company faced allegations, it was shown to be a fraud. It now serves as a warning for the scammers in the crypto industry.

The case emphasises the need for regulations to safeguard investors and avoid scams. Thodex demise is subtle, but it will serve as a cautionary story for the industry around the globe.

Also Read: Blanket Crypto Ban Hard to Implement

Conclusion

In Turkey, where cryptocurrencies were once seen as a lifesaver against inflation, the downfall of Thodex has extended beyond borders. The future of Thodex remains unclear, but it will certainly serve as a red sign to potential scammers in the cryptocurrency industry. The case intensifies the urgent need for more robust regulations, placing authority under immense pressure. Moreover, there will be another interesting crypto topic which can refer to here:https://player.me/crypto-whale-loses-24m/.

Frequently Asked Questions

What Is Faruk Özer’s Defence in the Legal Proceedings?

Faruk denied the allegation, saying he and his family are being played. He added that his exchange went through some hacking attempts and went bankrupt. He emphasised that his company had not previously been involved in criminal activities. Alongside his family, they have portrayed themselves as individuals wronged by the system, strongly refuting misconduct allegations.

What Key Factors Contributed to Thodex’s Downfall Beyond the Transaction Disruptions?

Thodex downfall was attributed to many factors other than transaction disruptions. It needed to maintain transparency. The growing concerns about the investor’s security and mismanagement eroded trust in the agency, leading to its collapse. Besides the company’s management, Faruk Özer’s careless behaviour in regulating the agency after he left Turkey raised concerns.

Are There Ongoing Investigations Into the Whereabouts of the Missing Cryptocurrency Assets From Thodex?

Yes, investigations are continued about the missing crypto assets from Thodex. Authorities in Turkey and other relevant jurisdictions have launched efforts to trace and recover the cryptocurrency holdings that disappeared following the collapse of the exchange. These investigations are aimed at determining the extent of the losses investors suffer and working to return the funds to their owners.