Turkey Crypto Assets Project Suspected of Fraud: 127 People Arrested, Losses May Exceed $2 Billion

Recently, Turkey has encountered some challenges in promoting the liberalization process of Crypto Assets. The most criticized issue is the illegal activities of some local crypto projects, which have caused significant losses to investors.

On May 30, 2024, the Turkish Interior Minister announced a major operation: a large-scale action was launched in Ankara against a suspected fraud involving a Crypto Assets project, resulting in the detention of 127 suspects, along with the seizure of a large amount of assets and several firearms.

The project is called Smart Trade Coin. Since 2021, Turkish investors have expressed dissatisfaction with the project's actions and have protested. According to the victims' lawyer, the project may have deceived about 50,000 users, resulting in estimated losses exceeding $2 billion.

Smart Trade Coin claims to provide software that connects multiple Crypto Assets exchanges. It claims to help users manage multiple exchange accounts through a single interface and set up automated trading bots for arbitrage trading, profiting from price differences between different exchanges.

However, multiple studies indicate that the project is likely a well-designed scam. In the app store, about half of the reviewers label it as a fraudulent application. Many users report losing 95% of their savings and suspect that these funds have been siphoned off by the project team.

Through blockchain analysis, we have identified some suspicious addresses that may be used to store and transfer stolen funds. The analysis shows that a large amount of ETH has flowed out of these addresses, with the scale of the funds involved being close to the estimated loss amount. These funds were subsequently funneled into major exchanges through a complex process of transfer, aggregation, and dispersion.

This incident highlights the urgent need for Turkey to establish a sound regulatory framework for Crypto Assets. Merely pursuing the freedom of Crypto Assets is far from sufficient; it is essential to create a compliant and transparent environment in order for the Crypto Assets industry to truly gain public trust and adoption.

In the future, the Turkish government and industry need to work together to seek a balance between protecting investors' rights, preventing financial risks, and promoting innovative development. Only on the basis of adhering to compliant operations can Crypto Assets become an effective tool for promoting economic freedom and value preservation.