Time to talk Turkey.
(Image credit: Velischuk via Getty Images)
Faruk Fatih Özer, the founder and CEO of the now-defunct crypto exchange Thodex, has been arrested in the Albanian city of Vlorë. Özer fled following the collapse of Thodex in April 2021: he initially claimed a halt in trading was due to cyberattacks, and that investors’ money was safe, before disappearing. Almost immediately afterwards, Turkish police arrested dozens of Thodex employees and seized the firm’s computers.
It subsequently emerged that, in April 2021, Thodex had moved approximately $125 million worth of bitcoin to the established US crypto exchange Kraken. Given the number of investors in Thodex left with nothing, this looks like straightforward theft from a failing business.
It’s not the whole story, either. Cryptocrime analysis firm Chainanalysis addressed Thorex specifically in its overview of 2021, in the wider context of a total $2.8 billion worth of crypto scams over this year being ‘rug pulls’: wherein a seemingly legitimate business is set up, operates as normal for a while, then suddenly all the money is gone. It’s large-scale fraud.
“We should note that roughly 90% of the total value lost to rug pulls in 2021 can be attributed to one fraudulent centralized exchange, Thodex, whose CEO disappeared soon after the exchange halted users’ ability to withdraw funds,” says the Chainanalysis report. That works out at an estimate of around $2.5 billion of crypto.
However, other estimates given by Turkish authorities are lower, and as with any crypto story it is hard to work out even approximately what the true value of money lost may have been. Some reports claim Özer fled with ‘only’ around $20 million worth of crypto and, whatever the total amount lost is, he is not the only Thodex employee accused of wrongdoing.
(Image credit: Getty – Zephry18)
Interpol had issued a red notice on Özer in April 2021, which basically means every police force in the world was asked to locate and arrest him. The Albanian minister for internal affairs, Bledar Chuchi, said that the fugitive’s identity was confirmed post-arrest by biometric results: Özer had apparently shaved his head. The Turkish government adds that: “The extradition proceedings of Fatih Özer to Turkey were initiated by the Interpol Department of the General Directorate of Security.”
Which is bad news for Özer, because this guy is probably going to spend the rest of his life in jail. Six people have already been jailed for their role in Thodex, including family members of Özer, while 20 other prosecutions are ongoing. The Turkish daily Harriyet reports that state prosecutors are out to set an example: “A prison sentence of 40,564 years is sought for each of these 21 people, including Özer, as over 2,000 people are included in the indictment as complainants.”
Thodex was founded in 2017, and its initial success was largely down to the wider context of Turkey’s state currency, the Turkish lira, undergoing a period of rapid inflation. This led to crypto acquiring mainstream traction in the country as an apparently more safe option than the fluctuating lira. This was particularly the case when it came to protecting savings, to the extent that the Turkish government is currently working on a bill to further regulate the industry, which is due to be passed in the very near future.
It’s a sobering reminder that, behind the malfeasance and the big numbers of Yet Another Crypto Scam, this company was not just defrauding big-pocketed investors but ordinary people looking to safeguard their financial future. Now, at least, it looks like Özer and others will face the most serious of consequences.
Rich is a games journalist with 15 years’ experience, beginning his career on Edge magazine before working for a wide range of outlets, including Ars Technica, Eurogamer, GamesRadar+, Gamespot, the Guardian, IGN, the New Statesman, Polygon, and Vice. He was the editor of Kotaku UK, the UK arm of Kotaku, for three years before joining PC Gamer. He is the author of a Brief History of Video Games, a full history of the medium, which the Midwest Book Review described as “[a] must-read for serious minded game historians and curious video game connoisseurs alike.”