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Turkish authorities arrested four employees of a cryptocurrency trading platform on suspicion of fraud after customer accounts were frozen, authorities said, the second collapse of a digital currency firm in Turkey within a week.
The collapse of Vebitcoin, one of dozens of cryptocurrency trading platforms that have sprung up in Turkey in recent years, came after the Thodex trading platform shut down last week, more than 60 of its employees were arrested, and its chief executive left the country.
Vebitcoin was a relatively small operation and the losses from it are unlikely to be big, said Turan Sert, who advises BlockchainIST, a cryptocurrency research center affiliated with Bahcesehir University in Istanbul.
Ilker Bas, the chief executive of Vebitcoin, told police after his arrest that the platform has 90,000 registered users and had a trading volume of 600 million lira to 800 million lira, or $72 million to $96 million, per month, the private news agency Demiroren reported. Customer losses are probably much smaller, because the same assets are typically traded repeatedly during the course of a month.
“Due to the recent developments in the crypto money industry, our transactions have become much more intense than expected,” Vebitcoin said on its website. “We have decided to cease our activities in order to fulfill all regulations and claims.”
Cryptocurrency trading is little regulated in Turkey, and the number of platforms has proliferated because of the relatively low cost of setting up. Off-the-shelf trading software costs around $100,000, said Mr. Sert, who also advises Paribu, one of the largest cryptocurrency trading platforms.
Mr. Sert estimated that there were more than 90 platforms, mostly “very small mom-and-pop shops.”
The phenomenon is by no means limited to Turkey. Cryptocurrencies like Bitcoin or Dogecoin have attracted the attention of serious investors and become a hot topic on Wall Street. Coinbase, a U.S.-based cryptocurrency trading platform, sold shares to the public for the first time this month and is valued by the stock market at $58 billion. Regulators in the United States and other countries have struggled to keep up with the fast growth of digital money.
The Turkish Central Bank barred the use of cryptocurrencies for purchases this month, citing their riskiness and popularity with criminals, and signaled that more regulation of the sector is coming. The prospect of greater scrutiny could be prompting some platforms to shut down, Mr. Sert said.
Customers of Thodex may have lost $2 billion, a lawyer for the firm’s clients said last week, but Mr. Sert said that figure probably referred to the site’s trading volume and greatly overstated the potential losses. Many platforms exaggerate their trading volume to attract customers, he said.
The total losses to cryptocurrency investors, while devastating to some individuals, are not large enough to push Turkey’s already shaky economy into crisis, Mr. Sert said.
“I don’t think this will create any instability in the system,” he said.
Article source: https://www.nytimes.com/live/2021/04/26/business/stock-market-today/