The former CEO of Turkish cryptocurrency exchange Thodex, Faruk Fatih Özer, has been sentenced to an astonishing 11,196 years in prison.
The ruling comes from a Turkish court, which found him guilty on charges of "establishing, managing, and being a member of an organization," "qualified fraud," and "laundering of property values." Özer's two siblings, who were also involved in running the exchange, received the same prison sentence of 11,196 years, 10 months, and 15 days.
Additionally, a court-ordered fine of around 135 million Turkish Liras (roughly $5 million) was imposed on them. This harsh verdict came after a prolonged trial that involved 21 defendants, with potential sentences totaling up to 40,564 years in prison. Remarkably, 16 of the 21 defendants were acquitted, and four of the seven individuals who were in custody were released due to insufficient evidence.
The trial unfolded with Özer declaring his innocence and claiming that he, his family, and Thodex had been wrongfully accused. He argued that Thodex was merely a crypto company that had gone bankrupt and vehemently denied any criminal intentions.
He stated in court, "I am smart enough to lead any institution on Earth. That is evident in this company I established at the age of 22. I wouldn’t have acted so amateurishly if this were a criminal organization."
The Thodex Collapse
The Thodex exchange was once a major player in the Turkish crypto landscape before its abrupt closure in 2021. The shutdown left approximately 400,000 users without access to their cryptocurrency deposits, amounting to nearly $2 billion. Özer initially attributed the exchange's closure to an undefined external investment that necessitated a brief trading hiatus. However, he later changed the narrative, citing cyberattacks as the reason for the trading halt, while assuring customers that their funds remained secure and would be reimbursed.
In April 2021, it was revealed that Thodex had transferred $125 million in Bitcoin to the U.S. exchange Kraken just before closing. Blockchain tracking firm Whitestream, which discovered this transfer, described it as a "cash out operation" involving executives misappropriating customer funds.
Özer disappeared after the platform's collapse, fleeing to Albania. It wasn't until August 2022 that he was located and detained in the coastal city of Vlorë, Albania. The collapse of Thodex coincided with the devaluation of the Turkish lira and subsequent inflation, making it particularly shocking for Turkey.
Later on, Interpol initiated the process to extradite Özer back to Turkey, and local prosecutors have sought jail sentences running into thousands of years for executives involved in the exchange.
The Growth of Crypto Adoption in Turkey
Despite the harrowing experience for crypto users in Turkey, more than half of Turkey’s adult population has since turned to crypto in a bid to preserve their purchasing power and weather the political and economic conditions according to a survey from Kucoin in May 2023. In fact, users aged between 18 to 60 went up to 52%, a whopping 12% increase from 40% back in November of 2021.
During that same period of time, the Turkish Lira also depreciated over 50% against the US Dollar – which led to cryptocurrencies being used as a hedge against skyrocketing inflation and devaluation.
The use of cryptocurrencies as a digital store of value to preserve asset value and to weather economic crises shows the potential for crypto to make a strong positive impact in the world. The survey collectively further shows the diverse applications of crypto adopters across different age groups, with some using their crypto assets to trade or preserve wealth, while others used their crypto for cross-border transactions or to send donations to non-profit organizations.
Either way, it’s clear that Turkey shows the potential of mass crypto adoption and it indicates an increasing interest in crypto as a hedge against inflation, especially with the recent decline of the Turkish Lira.