Faruk Fatih Özer, founder and CEO of the now-defunct crypto exchange Thodex, has been arrested in the Albanian city of Vlorë. Özer fled after the collapse of Thodex in April 2021: he first claimed that a trading halt was due to cyber attacks and that investors’ money was safe, before disappearing. Almost immediately afterwards, Turkish police arrested dozens of Thodex employees and seized the company’s computers.
It later 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 who are left with nothing, this looks like outright theft from a failing business.
That’s not the whole story either. The cryptocrime analysis firm Chainanalysis specifically approached Thorex in its overview of 2021, in the broader context of a total of $2.8 billion in crypto fraud this year being “rug pulls”: where an apparently legitimate business is established, operates as normal for a while, then suddenly all the money is gone. It is fraud on a large scale.
“We should note that approximately 90% of the total value lost to carpet cleaning in 2021 can be attributed to a fraudulent centralized exchange, Thodex, whose CEO disappeared shortly after the exchange stopped users’ ability to withdraw funds,” says the Chain Analysis report. That works out to an estimate of around $2.5 billion in crypto.
However, other estimates provided by the Turkish authorities are lower, and as with any crypto story, it is difficult to calculate even approximately what the real value of money lost may have been. Some reports claim that Özer fled with ‘only’ around $20 million in crypto, and whatever the total lost amount is, he is not the only Thodex employee accused of wrongdoing.
Interpol had issued a red notice on Özer in April 2021, which basically means that every police force in the world was asked to locate and arrest him. The Albanian interior minister, Bledar Chuchi, said the fugitive’s identity was confirmed after the arrest by biometric results: Özer had apparently shaved his head. The Turkish government adds that: “The extradition process of Fatih Özer to Turkey was initiated by the Interpol branch 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 prison. Six people have already been jailed for their role in Thodex, including family members of Özer, while 20 other prosecutions are ongoing. The Turkish newspaper Harriyet reports that state prosecutors are looking to set an example: “A prison sentence of 40,564 years has been requested 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 due to the broader context of Turkey’s state currency, the Turkish lira, undergoing a period of rapid inflation. This led to crypto gaining mainstream traction in the country as a seemingly safer alternative to the fluctuating lira. This was especially the case when it came to protecting savings, to the extent that the Turkish government is working on a bill to further regulate the industry, to be adopted in the near future.
It’s a sobering reminder that behind the abuse and the sheer number of Yet Another Crypto Scam, this company wasn’t just defrauding investors with big pockets, but ordinary people who wanted to secure their financial future. At least now it looks like Özer and others will face the most serious consequences.
