What's behind Thodex CEO's 11,196-year sentence?
Thodex was among the biggest cryptocurrency exchanges in Turkey. Unfortunately, the exchange suddenly disappeared during the start of the peak of the market in April 2021, when most cryptocurrencies began soaring to new price milestones.
On Friday, 8 September, 2023, various news outlets reported that the Thodex exchange's founder, Faruk Fatih Özer, along with his brother Güven and sister Serap, had been given an 11,196-year, 10-month, and 15-day sentence. Also imposed were approximately $5 million in judicial fines.
As one of the go-to exchanges during the first half of 2021 for many crypto traders in Turkey, more than 400,000 registered users of the Thodex platform suddenly found themselves unable to log into their accounts to access their deposits.
The total amount locked on the Thodex platform was about $2 billion worth of cryptocurrencies. With many traders ushering out their concerns online and others filing criminal complaints against the exchange, Özer fled his home country of Turkey and hid in Albania.
During the same month, Turkish police detained more than 60 people across eight regions linked to the collapsed exchange.
Additionally, detention warrants were issued for another 16 people connected to the Thodex trading platform.
With this, a red notice was issued for his arrest and extradition. In August 2022, he was arrested in Himare, a southern resort area in Albania.
In early April of this year, Özer was extradited to Turkey, with the Istanbul Airport Police Department taking custody of him.
He arrived in Turkey with seven charges laid before him, which included laundering the total amount of money resulting from the collapse of the exchange and defrauding merchants, cooperative managers, company executives, and people by employing information systems as a tool of a credit institution or a bank.
Verdict on Thodex employees and partners
Overall, the trial brought cases against 21 defendants, who faced a maximum of 40,564 years in prison.
In addition to the jailing of Özer and his brother and sister, four senior employees of Thodex were jailed. Of the 21 defendants, 16 were acquitted.
The collapse of cryptocurrency exchanges is not a recent development. Many of the trading platforms that made Statista's list of the biggest exchanges by 24-hour trading volume have disappeared due to cybercriminal activities.
According to a news report by Bitcoin.com, about 42% of exchanges have failed since 2014.
Many of them vanished without a trace. This means that thousands, if not millions, of traders who held digital assets with them have had to count their lost cryptocurrencies as bad debt.
How to avoid a Thodex-style loss of your crypto assets
As a sign of caution, stay away from investments that promise guaranteed high investment returns, are offered by unlicensed sellers, use complicated language and jargon that is difficult to comprehend, pressure you to buy on the go, or make unsolicited offers.
Irrespective of the annual percentage yields (APYs) they offer, they are likely to be scammers hiding behind the anonymous and private nature of the decentralized finance sector.
So, stay alert and take advantage of platforms such as CERTIK, a tool that monitors and analyzes several protocols and projects related to the blockchain sector.
More importantly, despite your quest to remain anonymous, try and patronize regulated trading platforms so that you may have a chance of recouping some, if not all, of your crypto assets should the exchange collapse.
Author: Raphael Minter
Raphael Minter/ Albert Zuhnden (preferred pen name) is a crypto finance writer, data miner, and fundamental analyst. Raphael has written hundreds of articles about centralized and decentralized financial instruments such as precious metals, commodities, stocks, and cryptocurrencies. He broke into digital finance in 2016 and believes digital assets and blockchain technology is the future of finance.