Turkish crypto shock: investors fear for hundreds of millions of dollars

Turkish crypto shock: investors fear for hundreds of millions of dollars

Caner Sen is facing ruin. The owner of a small Turkish publishing house had wanted to invest his savings well. So he decided to invest four million lira (440,000 euros) in cryptocurrency money. Within twelve months, the equivalent value grew to 30 million lira, an increase of almost 700 percent.

Last Friday, he wanted to exchange the digital coins he had bought on the local trading platform Vebitcoin into lira-and failed.

A representative of the platform assured him by phone that he would soon receive his money. But Sen no longer believes in that. «I want my money back,» he demands.

A crypto-earthquake occurs in Turkey. Only in mid-April, the Turkish Central Bank banned cryptocurrencies as a means of payment in the country. A short time later, the founder of a Turkish cryptocurrency trading platform fled with probably hundreds of millions of dollars. And now a local competitor unexpectedly files for bankruptcy.

The platform Vebitcoin had completely ceased operations and justified this with financial circumstances. Cryptocurrencies had been traded on the platform on a daily basis for the equivalent of around 60 million US dollars. The public prosecutor’s office and the financial supervisory authority are already investigating.

The events in Turkey highlight a largely unregulated area for speculation with digital means of payment. In Turkey alone, cryptocurrencies are traded daily for the equivalent of around two billion US dollars.

Digital assets such as Bitcoin are based on a decentralised booking system, whereby assets and payments are digitally signed and made transparently accessible to all – making fraud impossible.

Nevertheless, according to investigators, Faruk Özer succeeded in doing just that. The founder of Thodex, the first licensed cryptocurrency trading platform in Turkey, closed the online platform for «four to five working days» for allegedly necessary maintenance work.

The site is no longer available and will probably never be available again. According to consistent media reports, Özer is said to have gone abroad.

Here, too, the Istanbul Public Prosecutor’s Office is investigating. It is about the equivalent of 500 million to two billion US dollars.

The weakness of the Lira made Bitcoin attractive
The insolvency of Vebitcoin has particular significance in the context of the economic situation in the country. The lira has lost a lot of value, unemployment is high. Inflation last year was 16.2 percent. Faced with these difficulties, many people try to invest their savings wisely – and often try their luck with Bitcoin and other cryptocurrencies, presumably without knowing exactly what they were getting themselves into. In Turkey, this created a sheer cryptoeuphoria in recent years, in which newspapers daily depicted the bitcoin exchange alongside dollars and gold and even restaurants and car dealers accepted payment with the digital coins. So it should be over for now.

There is no trace of Özer, whom Interpol is searching for via «Red Notice». The 27-year-old often appeared on television and mentioned in interviews above all the advantages of Bitcoin and Co. «Everyone can earn money with it.»Members of the ruling party also enjoyed sunbathing with the young tech founder.

Özer has since stated that the allegations are unfounded. «In a few days I will return to Turkey and cooperate fully with the authorities.»Whether this happens and whether the money shows up: unclear.

However, many crypto investors may have become aware of the vulnerability of the digital currency generated by the algorithm: humans.

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