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Turkey: Crypto exchange founder flees country as $2bn probe launched

Turkish police detain 62 people as part of an investigation into cryptocurrency trading platform Thodex
Thodex pledged to distribute luxury cars through a flashy advertising campaign featuring famous Turkish models (AFP)

Turkish police have detained 62 people as part of an investigation into a cryptocurrency trading platform provider, state-owned Anadolu news agency said on Friday, after thousands of Turks filed criminal complaints saying they had been scammed.

Turkish prosecutors said on Thursday they had opened an investigation after the Istanbul-based founder of a cryptocurrency exchange shut down his site and appeared to have fled the country with a reported $2bn in investors' assets.

The Thodex website went dark after posting a mysterious message saying it was suspending trading for five days on Wednesday because of an unspecified outside investment.

Prosecutors issued arrest warrants for 78 people and 62 had so far been detained in an operation centred on Istanbul, but stretching across eight provinces, Anadolu said.

Turkish security officials released a photo of Thodex founder Faruk Fatih Ozer going through passport control at Istanbul airport on Tuesday.

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Istanbul police said Ozer, reported to be either 27 or 28 years old, had flown to the Albanian capital Tirana.

The financial crimes investigation board Masak blocked the company's accounts on Wednesday and began an investigation, a Masak source told Reuters.

The trading platform is “unable” to continue operations with Ozer out of the country, the company said in a written statement on Thursday.

The shutdown of the platform has left the remaining assets of about 391,000 active users “irretrievable,” according to Oguz Evren Kilic, who represents an unspecified number of Thodex users and has filed a legal complaint on their behalf.

Bedirhan Oguz Basibuyuk, Thodex’s lawyer, told Bloomberg News he did know where Ozer was, but that he planned to return only after payments to all users have been made.

When asked why Ozer went abroad, Basibuyuk said that he would have been “either arrested or committed suicide” if he stayed.

Luxury cars

Thodex had launched aggressive campaigns to lure investors. 

It had first pledged to distribute luxury cars through a flashy advertising campaign featuring famous Turkish models.

The platform then launched a drive to promote the Dogecoin cryptocurrency in mid-March, in which it sold the coins at a big rebate, but did not allow investors to sell.

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Thodex's website said four million Dogecoins had been distributed, but many people have taken to social media to complain they never received them.

Cryptocurrencies are particularly popular among Turks who are looking to preserve their saving in the middle of a sharp decline in the value of the local lira.

The Turkish market remains unregulated despite growing scepticism from President Recep Tayyip Erdogan's government about the safety and use of digital currencies.

Lat week, the Turkish central bank decided to ban the use of cryptocurrencies in payments for goods and services starting from 30 April.

It warned that cryptos "entail significant risks" because the market is volatile and lacks oversight.

"Wallets can be stolen or used unlawfully without the authorisation of their holders," the central banks warned last week.