Crypto Exchange Thodex Founder Sentenced to Over 11,000 Years Amid Fraud Allegations

In a decision by the Anatolian 9th High Criminal Court, Faruk Fatih Özer, the mastermind behind the Turkish cryptocurrency platform Thodex, has been found guilty in a significant fraud case. Alongside Özer, six other individuals were detained, making up a total of 21 individuals implicated in the fraud allegations.

The court’s judgment was severe. Özer, together with his siblings, Güven Özer and Serap Özer, received a staggering sentence of 11,190 years and 6 months imprisonment. The charges that led to this lengthy sentence encompassed “establishing, directing, and participating in a criminal organization,” “engaging in sophisticated fraud,” and “money laundering.”

In addition to this, the court mandated an extra sentence of 6 years, 4 months, and 15 days for each sibling. They were also slapped with a hefty fine of 135 million lira for “committing fraud using digital systems.” In total, the cumulative sentence for each of the Özer siblings stands at 11,196 years, 10 months, and 15 days.

Thodex, which was once a beacon in Turkey’s cryptocurrency landscape, took an unexpected turn in 2021 when it suddenly halted all operations. This abrupt closure left numerous users in a quandary, unable to access their digital assets, which were estimated to be worth around $2 billion.

The situation became murkier when Özer departed Turkey post the shutdown, sparking rumors of a potential exit scam. Despite the swirling allegations, Özer remained steadfast in his denials.

In the courtroom, Özer presented a defense centered on the premise that Thodex was simply a business venture that unfortunately went under. He asserted, “I possess the acumen to oversee any global institution. My capabilities are evident from the enterprise I initiated at a mere age of 22. Had I intended to create a criminal syndicate, my actions would have been far more sophisticated.”

The Anadolu Chief Public Prosecutor’s Office, in its indictment, shed light on the deceptive practices of the Thodex platform. The document revealed that a sum equivalent to 253 million 714 thousand 909 lira in cryptocurrency was moved from three distinct accounts under the control of Özer. Intriguingly, a large chunk of these digital assets found their way to cryptocurrency wallets based in Malta.

The saga took another twist when Özer was captured in Albania on August 30, 2022. Following legal procedures, he was extradited to Turkey by April 20, 2023, and by April 23, he was under detention at the Anadolu Justice Palace.

This case has garnered extensive coverage from global media powerhouses like Cointelegraph and Fortune. Their reports underscore the pivotal nature of the Thodex case in the realm of cryptocurrency and highlight the broader ramifications it holds for the regulation of digital assets and safeguarding investor interests.

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Ripple Alert: Over 400M XRP Moved from Bitvavo-Connected Wallet

A Mammoth Transaction

In a transaction that has sent ripples through the cryptocurrency community, a staggering 424,354,912.78345 XRP, valued at approximately $214.3 million, was transferred from one unknown wallet to another. The transaction was reported by Whale Alert, a blockchain monitoring service, on September 1, 2023, at 6:09 pm local time (10:09:11 UTC).

Source: XRPScan

Transaction Details

The transaction was categorized as a “PAYMENT” and was executed on the Ripple blockchain.

The transaction hash is 188A6212DD4BC7BE79BFA0C442E0E60EB05FA798C9F1FC87CF66F4A55D3ECE0F.

The source wallet address is rJps4V3s9U87NDAJuGS7qX6mAdWxpcZNeX, and the destination wallet address is rp6JBQ4rLrjfXgojhqm8Eikf4nusT8miuk DT: 1000.

Bitvavo Connection

Upon further investigation, it has been revealed that the source address is connected to Bitvavo, the Netherlands’ largest cryptocurrency exchange.

xrp transaction over 300M.png

Source: XRPScan

Founded in 2018, Bitvavo aims to make digital currency accessible to all. The platform offers a comprehensive suite of services for trading, storing, and managing digital assets. Notably, Bitvavo prioritizes security, storing most digital assets in cold wallets and requiring two-factor authentication for account access.

Market Implications

The substantial size of the transaction has sparked widespread speculation. Whale transactions frequently induce volatility in the cryptocurrency market, making it crucial to closely monitor subsequent activity.


Based on the connection to Bitvavo, it can be concluded that the crypto exchange is likely reorganizing its wallets, which led to this massive XRP transaction. While the purpose and the parties involved in the transaction remain undisclosed, the event has undeniably piqued the interest of market participants.

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FTX Crypto Exchange Suspends Claims Portal Access After Kroll Data Breach

FTX, a bankrupt cryptocurrency exchange, has announced the temporary suspension of impacted user access to its claims portal. This decision comes in the wake of a cybersecurity breach at Kroll, a firm overseeing FTX’s ongoing bankruptcy proceedings as the appointed claims and noticing agent.

The announcement, made on the social media platform X (formerly known as Twitter), underscores FTX’s proactive approach to safeguarding its users and assets. The breach at Kroll led to the exposure of non-sensitive data of claimants involved in the bankruptcy case. In response to potential concerns, FTX has issued a strong advisory to its users. “Users are strongly cautioned against making alterations to their claims or the accepted schedules in light of the incident,” the exchange stated.

Despite the unsettling circumstances surrounding the breach, FTX remains confident in the security of its infrastructure. The exchange has gone on record to assure its user base that “the security of account passwords, internal systems, and financial assets remains uncompromised.”

Kroll, on its part, has taken the initiative to reach out to affected individuals. The firm is actively advising them on precautionary measures to ensure self-protection against potential threats.

However, the situation has taken a concerning turn. ZachXBT, a renowned blockchain analyst, has reported the emergence of phishing emails targeting FTX customers. This development hints at a potential compromise of personal data, raising alarms within the crypto community.

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HashKey Launches as HK’s First Licensed Retail Crypto Exchange, Begins BTC and ETH Trading

On 28 August 2023, HashKey Exchange, the city’s first licensed retail virtual asset exchange (crypto exchange), commenced operations today. The official launch, hosted at the Maritime Museum Central, was attended by key figures from the HKSAR government, leading banks, insurance entities, and representatives from the Big 4 auditing firms.

The platform, which supports direct bank transfers in both USD and HKD, introduced initial fiat trading pairs such as BTC/USD, ETH/USD, and USDT/USD. Joseph Chan Ho-lim, JP, Undersecretary for Financial Services and the Treasury, and Norman Chan Tak-lam, GBS, JP, Chairman of the Hong Kong Web3 Association, were among the notable speakers who shed light on the evolving landscape of the Web3 industry in Hong Kong.

Livio Weng, COO of HashKey Group, highlighted the capabilities of the HEX Engine, a robust system designed to handle up to 5,000 transactions per second (TPS). Emphasizing compliance, HashKey Exchange operates under the stringent guidelines set by the Hong Kong Securities and Futures Commission. This includes rigorous user admission protocols, anti-money laundering measures, and consistent transaction monitoring. Additionally, the platform has fortified its security measures, storing 98% of its digital assets in cold wallets. To ensure transparency and adherence to regulatory standards, regular audits are conducted by the Big 4 accounting firms.

In celebration of its inauguration, HashKey Exchange is offering a temporary waiver on trading fees and has introduced the “HashKey Grand Launch Festival,” providing added benefits for its new user base.

HashKey Exchange, a subsidiary of HashKey Group, stands as the pioneer in Hong Kong, having received the green light for virtual asset trading for retail users from the Securities and Futures Commission (SFC). HashKey Group, a prominent digital asset financial service provider in Asia, delivers a comprehensive suite of services, ranging from trading to Web3 infrastructure, with operations spanning Hong Kong, Singapore, and Japan.

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Crypto Exchange Bittrex Settles with SEC for $24 Million

The Securities and Exchange Commission (SEC) revealed on August 10, 2023, that Bittrex Inc., a prominent crypto trading platform, and its co-founder and erstwhile CEO, William Shihara, have reached a settlement over allegations of operating without proper registrations. The charges encompassed operating an unregistered national securities exchange, broker, and clearing agency. Bittrex’s international counterpart, Bittrex Global GmbH, was similarly implicated for neglecting to register as a national securities exchange.

Documents from the U.S. District Court for the Western District of Washington detail the SEC’s grievances, highlighting Bittrex’s role as an unregistered entity catering to U.S. investors. These investors were allegedly presented with crypto assets that, according to the SEC, were securities in disguise. The narrative deepens with claims that Bittrex, under Shihara’s guidance, advised crypto issuers to erase certain public statements that could potentially draw regulatory attention.

Gurbir S. Grewal, the SEC’s Enforcement Division Director, remarked, “Bittrex’s longstanding tactic of sanitizing online statements to sidestep federal securities regulations has proven futile.”

The terms of the settlement dictate that Bittrex and Shihara are prohibited from breaching specific sections of the Securities Exchange Act of 1934. Financially, both Bittrex entities are jointly on the hook for a sum of $24 million, a figure that encompasses various penalties and dues.

This settlement is a response to the SEC’s charge released on April 17, 2023, in which the regulatory body alleged that Bittrex had amassed a staggering $1.3 billion from transaction fees, all the while neglecting to comply with mandatory registration requirements.

SEC Chair, Gary Gensler, weighed in, asserting, “The recurring issues in the crypto sector aren’t rooted in ambiguous regulations but in a pervasive nonchalance towards compliance.”

While the settlement awaits judicial endorsement, the implicated parties have neither confirmed nor refuted the SEC’s claims. This episode is yet another testament to the rigorous oversight the crypto world is currently subjected to.

Bittrex’s legal woes aren’t confined to the SEC. Last year, on October 11, the U.S. Department of the Treasury’s OFAC and FinCEN announced hefty settlements with the crypto exchange, amounting to over $24 million and $29 million, respectively.

The SEC’s rigorous approach to crypto exchanges is evident. This year alone, crypto exchange giants like Gemini, Binance, and Coinbase have faced charges. While some, like Bittrex and Kraken, opt for settlements, others, notably Coinbase, remain embroiled in legal tussles. 

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Crypto Exchange Bitstamp to Suspend Trading AXS, CHZ, MANA, MATIC, NEAR, SAND, and SOL

Bitstamp, one of the world’s oldest cryptocurrency exchanges, has announced a suspension of trading for seven cryptocurrencies in the United States, effective from August 29, 2023. The affected cryptocurrencies include AXS, CHZ, MANA, MATIC, NEAR, SAND, and SOL.

In an official statement released on Bitstamp’s blog, the company explained that the decision was made “considering recent developments” and in alignment with their “comprehensive framework” to evaluate cryptocurrencies in light of the dynamic regulatory environment. The statement further clarified that as of the mentioned date, new orders involving these assets would be disabled, and all existing orders across the affected trading pairs would be canceled.

Customers in the U.S. will still be able to hold these assets within their Bitstamp accounts and withdraw them at any time. The company has urged users to execute any desired buy or sell orders involving the affected assets before the deadline.

The New York State agency of Financial Services has issued Bitstamp USA, Inc. a license allowing it to participate in Virtual Currency Business Activity. This same agency has also issued Bitstamp USA, Inc. a license allowing it to act as a Money Transmitter.

This move comes at a time when Bitstamp is actively seeking to raise funds for expansion. The delisting coincides with the company’s efforts to comply with the dynamic regulatory environment, as stated in their official announcement, though no direct connection to investor pressure has been publicly disclosed

According to a Bloomberg report, Bitstamp initiated the fundraising process in late June 2023, with Galaxy Digital Holdings acting as an adviser. The funds are planned to be used for launching derivatives trading in Europe next year, expanding into Asian markets, and enhancing operations in the U.K.

Bitstamp’s global chief executive officer, Jean-Baptiste Graftieaux, emphasized that the company is not for sale and that the priority is to “accelerate Bitstamp’s growth by providing new products and services to retail and institutional crypto customers.”

Founded in 2011 and headquartered in Luxembourg, Bitstamp was once a primary venue for Bitcoin trading. It is now the world’s seventh-largest exchange, with about $126 million in trading volume in a recent 24-hour period. In 2018, Bitstamp was acquired by NXMH, a European investment firm owned by South Korean conglomerate NXC.

The suspension of trading for the seven cryptocurrencies is a significant indicator in Bitstamp’s operations, reflecting the ongoing challenges and complexities of regulations.

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Binance Secures First Operational MVP License from Dubai’s VARA

Binance has achieved a milestone by becoming the first crypto exchange to receive an Operational MVP License from Dubai’s Virtual Assets Regulatory Authority (VARA). This license enables Binance to offer regulated virtual asset exchange services in Dubai, affirming its commitment to compliance and collaboration with local regulators.

The Operational MVP License was granted to Binance’s Dubai subsidiary, Binance FZE, and allows the exchange to offer services approved by VARA, including exchange and broker-dealer services. These services are initially available to institutional and qualified retail investors in Dubai.

The issuance of this license follows Binance’s successful attainment of a provisional MVP license in March 2022 and a preparatory MVP license in September 2022. VARA has now permitted Binance to operate two licensed activities: virtual asset exchange services and virtual asset broker-dealer services.

The progression from the Provisional License to an Operational MVP License means eligible users in Dubai can now access authorized services, including the ability to safely convert virtual assets to fiat, under VARA-designated standards compliant with the Financial Action Task Force.

Richard Teng, Head of Regional Markets at Binance, commented, “We are honored to be the first exchange to be granted an operational Minimum Viable Product License by VARA — a result of over a year of due diligence, collaboration, and consistent demonstration of responsible intent.”

The UAE’s embrace of blockchain technology has created a thriving industry with security and innovation at its core. Binance’s achievement in securing this license sets a precedent for positive collaboration in the rapidly-evolving financial technology landscape.

Alexander Chehade, Binance Dubai’s General Manager, noted, “With this operational MVP license, all users onboarded through this platform can expect access to a trusted and regulated service that prioritizes security alongside compliance with highly specialized, tier-one virtual asset regulations under VARA.”

While Binance has achieved success in Dubai, it has faced regulatory challenges in other countries. Binance withdrew its license application in Germany after BaFin denied the application. The exchange has also withdrawn license applications in Austria, the Netherlands, and Cyprus.

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Thailand’s SEC enhances investor protection with new cryptocurrency trading rules.

Thailand’s Securities and Exchange Commission (SEC) has introduced new guidelines to strengthen investor protection in the cryptocurrency industry. The SEC has mandated clearer disclosure of risk warnings and restrictions on digital asset business operators’ deposit and lending services.

The rules, endorsed during meetings in September, December of 2022, as well as May of 2023, require cryptocurrency business operators to explicitly inform potential investors about the inherent risks involved in trading. Customers must acknowledge these risks and provide consent before commencing trading, following an investment suitability assessment and appropriate investment proportions.

The second part of the new regulations prohibits digital asset business operators from providing or supporting deposit taking and lending services, with certain exceptions. These rules will take effect on August 30, 2023, and prohibit offering returns on digital asset deposits unless it falls under promotional activities defined by the SEC.

Additionally, the regulations prohibit any actions aimed at persuading or advertising deposit taking and lending services to the general public, including those provided by other entities.


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US Court Backs IRS in Part Against Kraken Over Tax Rules

The United States District Court, Northern District of California, has partially upheld a summons issued by the Internal Revenue Service (IRS) to Payward Ventures, Inc. and its subsidiaries, collectively known as “Kraken“. Kraken, a prominent online crypto exchange, has been under scrutiny for its compliance with tax regulations.

The court order comes after Kraken failed to comply with an IRS summons, leading to the United States initiating legal action to enforce it. The court’s decision to grant the petition in part and deny it in part marks a crucial juncture in this ongoing case.

Kraken, known for its global reach, offers its digital currency exchange services to users in over 190 countries. The platform provides a variety of account levels, including Starter, Express, Intermediate, and Pro, each requiring different levels of user verification. While the Starter and Express accounts offer limited services and require lower levels of verification, the Intermediate and Pro accounts offer a wider variety of transaction types and higher withdrawal limits, necessitating additional user verification.

The IRS investigation into Kraken was triggered by concerns over tax compliance issues related to cryptocurrency. These concerns were highlighted in reports by the Government Accountability Office (GAO) in 2013 and the Treasury Inspector General for Tax Administration (TIGTA) in 2016. The reports identified several tax compliance risks associated with virtual currencies, including underreporting of income and tax evasion.

In response to these concerns, the IRS expanded its Electronic Payment Systems Initiative (EPSI) to address U.S. taxpayers who use virtual currencies for tax avoidance purposes. As part of this initiative, the IRS established a Virtual Currency Issue Team (VCIT) to study the issue and consider the compliance impact related to virtual currencies. The summons to Kraken is part of the tools being used in this investigation.


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New York Attorney General Recovers $1.7 Million from CoinEx for Operating Illegally

New York Attorney General Letitia James has successfully recovered over $1.7 million from CoinEx (COINEX) following a lawsuit against the cryptocurrency platform. CoinEx was found to be operating without the necessary registration as a securities and commodities broker-dealer and falsely representing itself as a crypto exchange. The resolution of the lawsuit requires CoinEx to refund more than $1.1 million to New York investors and pay over $600,000 in penalties to the state.

As part of the consent order, CoinEx is now banned from offering securities and commodities transactions in New York and prohibited from providing its platform in the state. In response to the lawsuit, CoinEx has publicly announced its withdrawal from the United States. Attorney General James has been actively working to enhance oversight and regulation of cryptocurrency companies to safeguard New York investors, resulting in over $500 million recovered from the cryptocurrency industry.

Attorney General James stressed the risks associated with unregistered crypto platforms, highlighting the importance of compliance with New York’s laws. She reiterated her commitment to crack down on crypto companies that disregard the law, deceive investors, and put New Yorkers at risk.

CoinEx, a Hong Kong-based virtual currency trading platform, allowed investors to buy and sell cryptocurrency without registering as a securities and commodities broker-dealer, a requirement under New York law. An investigation conducted by the Office of the Attorney General (OAG) confirmed that individuals with New York-based IP addresses could easily access and utilize CoinEx’s services.

Under the terms of the settlement, CoinEx is obliged to provide full refunds totaling $1,172,971.50 to 4,691 investors in New York. The refunds can be received as cryptocurrency directly from CoinEx within the next 90 days. After this period, eligible investors can request their refund in U.S. currency by contacting OAG. The refund amount will be based on the cryptocurrency or its cash equivalent held in the investors’ accounts as of April 25, 2023.

CoinEx must also implement geoblocking measures to prevent New York IP addresses from accessing its platform. In addition, the company is prohibited from creating new accounts for U.S. customers, and existing U.S. customers are only allowed to withdraw their cryptocurrency holdings from the platform.

This settlement is part of Attorney General James’ ongoing efforts to enforce New York laws within the cryptocurrency industry. Recent actions include the introduction of comprehensive cryptocurrency legislation, the recovery of $4.3 million from Coin Cafe for defrauding investors, and lawsuits against KuCoin, Nexo, and the former CEO of Celsius. The Attorney General has consistently emphasized the importance of accurately declaring and paying taxes on virtual investments and urges affected individuals to report deceptive conduct in virtual asset markets.

Assistant Attorney General Shantelee Christie, along with Legal Assistants Charmaine Blake and Edward Jaffe, and Senior Detective Investigator Brian Metz, handled the matter within the Investor Protection Bureau. The Bureau operates under the Division of Economic Justice, overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy, with Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim leading the Investor Protection Bureau.


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