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

Turkish crypto shock: investors fear for hundreds of millions of dollars
Bitcoin and Co. are very popular in Turkey because of the weak lira. But after the recent scandals, investor confidence has been shaken.
Ozan Demircan is a foreign correspondent with German and Turkish roots. Ozan Demircan

Many people in Turkey are trying their luck with Bitcoin and other cryptocurrency, presumably without knowing exactly what they are getting into. Source: Reuters
Riding a ferry across the Bosphorus in Istanbul.
Many people in Turkey are trying their luck with Bitcoin and other cryptocurrency, presumably without knowing exactly what they are getting into.

(Photo: Reuters)
Istanbul 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 liras (440,000 euros) in cryptocurrency. Within twelve months, the equivalent value grew to 30 million lira, an increase of almost 700 percent.

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

A representative of the platform had assured him over the phone that he would soon get his money. But Sen no longer believes that. „I want my money back,“ he demands.

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

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

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

Digital assets such as Bitcoin are based on a decentrally organised booking system, whereby asset sums and payments are digitally signed and made transparently accessible to all – fraud is thus supposed to be made impossible.

Nevertheless, according to investigators, Faruk Özer is said to have succeeded in doing just that. The founder of Thodex, the first licensed trading platform for cryptocurrencies in Turkey, had closed the online platform for „four to five working days“ for allegedly necessary maintenance work.