In a significant legal development on the investor protection front, Faruk Fatih Özer, the founder of the now-defunct Turkish cryptocurrency exchange Thodex, along with his sister Serap Özer and brother Güven Özer, has been sentenced to a staggering 11,196 years, 10 months, and 15 days in prison, as reported by local media. Additionally, a judicial fine of 135 million Turkish liras (approximately $5 million) has been imposed as part of their punishment.
Thodex had once held its position as one of Turkey’s largest and most prominent cryptocurrency exchanges before a sudden and tumultuous downfall in April 2021. The exchange abruptly went offline, leaving over 400,000 members in the dark, unable to access their deposits totaling a staggering $2 billion in cryptocurrencies. Compounding the crisis, Faruk Fatih Özer disappeared, prompting an extensive manhunt.
Özer was eventually located in Albania and arrested in August 2022 following an Interpol red notice against him. By April 2023, he had been extradited to Turkey, where he was apprehended by the authorities. Özer faced a litany of charges, including establishing and managing an organization with criminal intent, being a member of an illicit organization, fraud committed through information systems of banks or credit institutions, fraud against merchants, company executives, and cooperative managers, as well as money laundering involving proceeds from criminal activities.
When the case came to light, Güven Özer (brother), Serap Özer (sister), and four other senior Thodex employees were incarcerated. Additionally, at least 83 individuals were detained in connection with the investigation. During the subsequent trial, 21 defendants faced the possibility of a combined sentence totaling a staggering 40,564 years in prison.
The Anatolian 9th Heavy Penal Court announced its verdict on Thursday, resulting in the acquittal of 16 of the 21 defendants. Four of the seven previously incarcerated individuals were also released due to insufficient evidence. The remaining defendants received varying prison sentences for their roles in the Thodex scandal, reflecting the diverse nature of their involvement.
The collapse of Thodex had sent shockwaves through Turkey, where cryptocurrencies had been used as a hedge against soaring inflation and the rapid devaluation of the national currency, the lira. The aftermath of the Thodex debacle underscores the significance of regulatory oversight and investor protection within the crypto industry.
In a separate but notable development, the former CEO of FTX, Sam Bankman-Fried, commonly known as SBF, faces ongoing legal challenges. SBF lost an initial appeal for release on bail ahead of his criminal trial. His legal team had sought his immediate release from the Metropolitan Detention Center in Brooklyn, citing concerns about the adequacy of measures allowing him to prepare his defense, notably limited internet access.
Bankman-Fried’s legal situation escalated after his extradition from the Bahamas to the United States in December 2022. He had previously been free on a $250 million bond and was primarily confined to his parents’ residence in California. However, in August 2022, a federal judge revoked his bail following allegations of witness intimidation involving former Alameda Research CEO Caroline Ellison. With approximately four weeks remaining before his trial on October 3, the legal battle surrounding Sam Bankman-Fried continues to evolve, adding a layer of complexity to the cryptocurrency industry’s ongoing legal landscape.
Perhaps this harsh sentence in the Thodex scandal may trickle down to SBF and send a strong message to fraudsters in the cryptocurrency space.
Digital Assets Desk