Turkish financial crimes watchdog MASAK on late Friday blocked all bank accounts of cryptocurrency exchange platform Vebitcoin in the country, reported state-owned news agency AA on Saturday. This is the second crypto-scandal in a week in Turkey, which could trigger a run on the rest of Turkey’s proliferating exchanges. A number of international studies put the ratio of Turkish saver putting their money into cyrpto-assets at 4-7% of the total.
The scandal comes at a very bad time, as the expected declaration by Joe Biden of atrocities committed against Anatolian Armenians in 1915 as “genocide” could escalate the tensions between the two nations, undermining trust in the economy and markets.
The move by Turkey’s financial crimes unit MASAK came after Vebitcoin announced that it stopped all of its activities citing financial strains.
MASAK also initiated an investigation into Vebitcoin and its managers. Vebitcoin is Turkey’s fourth biggest exchange with close to $60 million in daily volumes, according to CoinGecko.com which tracks data on price, volume and market value on crypto markets. More than half of this volume came from Bitcoin, which dropped 19% this week, added Bloomberg.
On Thursday, an investigation into another cryptocurrency platform, Thodex, was launched and 62 suspects were arrested as part of it. Reportedly, $2 bn is missing vs $400 mn of the owner’s personal financial assets in banks, which had been frozen by MASAK. The owner of Thodex, Mr Fatih Ozer is believed to be in Albania. Opposition media is printing allegations of Ozer having connections to infamous mafia Don Mr Sedat Peker, nationalist party MHP and Interior Minister Mr Suleiman Soylu.
The daily volume of trade in Turkish crypto markets was close to $2 billion for Friday, according to data from CoinGecko.com.
Coupled with the declines in global crypto-markets, Monday could witness a run on Turkey’s fledgling crypto-exchanges, because a large portion of investors are rookies, not having been tested in market turbulence. A rising dollar and the aforementioned tensions with US are also possible catalysts for a run.
Turkey’s main stock exchange Borsa Istanbul is not overbought, but it, too, has attracted 1.2 mn rookie investors over the last year, fleeing from low-yielding deposits. In the worst case scenario, the crypto-debacle could spill over to the stock market where an endless que of IPOs have already sapped the strength of the secondary market rally.
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