- In the last week, Turkey has become a hotbed of crypto shambles with two exchanges shutting down, one of which is suspected of scamming its users $2 billion.
- The unease in the country began a few weeks ago with the government banning all direct and indirect Bitcoin payments for goods or services.
Another cryptocurrency exchange has closed its doors in Turkey and offered little explanation for its actions. There is real concern and panic among crypto traders in Turkey, with this being the second exchange to shut down in under a week. Vebitcoin, a digital asset trading platform, on Friday announced it had halted all activities on their platform. As a consequence, users’ funds have since been locked. In its announcement, the exchange cited financial difficulty.
Due to the recent developments in the crypto money industry, our transactions have become much more intense than expected. We would like to state with regret that this situation has led us to a very difficult process in the financial field. We have decided to cease our activities in order to fulfil all regulations and claims.
Its failure to specify what the financial difficulty is concerned many of its users who are unclear how or when they can withdraw funds. Vebitcoin is one of the smaller exchanges in the country with a daily volume of $60 million as of Thursday. Of this, 56% is in Bitcoin.
Users are taking solace in the fact that the exchange is associated with BitGo. This suggests that the products on the exchange were insured. However, BitGo has since clarified that Vebitcoin was only a hot wallet client, not a cold wallet client.
Since the announcement, Turkey’s financial watchdog, MASAK has blocked the company’s onshore bank accounts pending investigations.
Turkey witnessing one too many crypto scams
A much larger investigation is going on in the Middle Eastern country. Earlier in the week, the third-largest crypto exchange closed down with executives suspected to have made away with roughly $2 billion of clients’ funds. The exchange first announced it was closing for a few days due to a sale process. After going offline for far longer, users voiced concerns to which there was no response. Furthermore, the CEO was said to have left the country. On Wednesday, MASAK locked the company’s accounts and began an investigation. On its last day of trading, it recorded a daily trading volume of $538 million.
Police have since arrested at least 62 people and issued warrants for others. CEO, Faruk Fatih Ozer, is said to have flown to the Albanian capital Tirana on Tuesday.
Although there is no direct connection, all the disarray began mid-month with the government’s ban of cryptocurrency payments. Turkey banned the use of Bitcoin and associated cryptocurrencies for direct or indirect payments for goods or services. It cited security risk for the decision.
Cryptocurrencies, and Bitcoin in particular, have been popular in the country as the economy faces record inflation and an unemployment crisis. At the time of the announcement, Bitcoin experienced a brief dip in prices. Market observers were highly critical of the decision noting that it was a misguided move used to cover the government’s economic failure.