Looming cryptocurrency regulations in Turkey has caused a run on exchanges over the past week as traders rushed to pull their digital assets from local platforms.
State-run Andalou Agency last week reported the arrest of Vebitcoin chief exec Ilker Bas and three others accused of fraud. The exchange had suddenly suspended trade and locked users out of their accounts.
Just hours before, dozens were detained in connection with the apparent Thodex exit scam. Thodex’ founder was spotted at Istanbul Airport on Thursday reportedly fleeing to Albania with $2 billion worth customer crypto.
On Friday, Goldexcoin became the third Turkish exchange to go offline in three days, with authorities accusing execs of defrauding users by simply closing up shop with their funds.
Turkish lira goes down, crypto exchange users goes up
Turkish cryptocurrency exchanges had influxes of new users over recent months as the value of the lira tumbled and inflation rates hit double digits.
However, a central bank announcement on April 16 declared crypto payments illegal, spooking investors. One by one, crypto exchanges claimed technical issues and went offline — leaving users in the dark.
Bloomberg noted BTCTurk (one of Turkey’s largest exchanges) began offering custodian services to clients and other crypto exchanges in a bid to reduce investor uncertainty during the flux.
In a policy briefing viewed by Protos, former Turkish MP Aykan Erdemir explained the crypto exchange run came after investors interpreted pending central bank restrictions as yet another example of “the Erdogan government’s […] heavy-handed meddling in the markets.”
Erdemir, now senior director at Washington-based nonpartisan think-tank Foundation for Defense of Democracies, further explained local crypto users aren’t believing regulators built the new crypto laws to curtail illegal activity.
“Turkish president’s real interest is in tapping into citizens’ foreign currency, gold, and cryptocurrency assets to boost the economy and the lira,” said Erdemir.