Crypto investors in Turkey have been dealing with major issues lately. Another major digital currency exchange has collapsed in the country and its CEO is being detained by authorities.
Turkish crypto exchange Vebitcoin has suspended its operations and claims that it decided to do so due to deteriorating financial conditions. This according to a report from the Demiroren News Agency which noted that Vebitcoin’s CEO Ilker Bas and several other workers are being detained by Turkish authorities. The country’s Financial Crimes Investigation Board has reportedly blocked Vebitcoin’s accounts and launched an investigation into the matter.
As reported by Bloomberg, Vebitcoin is one of Turkey’s largest exchanges with nearly $60 million in daily trading volume (according to CoinGecko data). Over half of this crypto trading volume comes from Bitcoin (BTC) which is trading at just under $50,000 at the time of writing (after recently reaching an all-time of nearly $65,000).
This past week’s crypto market crash marked the worst period for BTC since the leading crypto dropped considerably toward the end of February 2021. While analysts have cautioned that investors might see more losses ahead, it’s worth noting that Bitcoin was only trading at $30,000 when 2021 began. Moreover, the flagship cryptocurrency has shown incredible resiliency as it managed to recover from a March 2020 crash that saw its price drop below $4,000.
But the rise of crypto-assets has also presented many challenges. Vebitcoin’s collapse in Turkey has come shortly after Thodex suspended its operations and its founder has also reportedly left the country. Thodex claimed around 390,000 users according to a legal representative for those affected by the losses due to mismanagement. Notably, it’s now estimated that traders may be facing losses of up to $2 billion (as reported by the local Haberturk newspaper).
These two Turkish exchanges were a key part of the crypto boom that attracted many local investors who were looking to shield and maintain their savings – which are being impacted by the rising levels of inflation in the country due to an unstable socioeconomic environment.
Inflation in Turkey reportedly reached 16.2% last month, which is over 3x the reserve bank’s projection. The Turkish lira has weakened over 10% against the US dollar in 2021. The lira has now recorded its 9th straight year of losses against the USD.
The daily reported trading volume in Turkey’s digital currency markets was almost $2 billion for Friday (April 23, 2021). The dramatic surge in crypto trading has made regulators pay more attention to the nascent sector.
The Turkish reserve bank has stated that cryptocurrencies may not be used as a legal payment method, effective from April 30, 2021. The nation’s authorities have also said that payment and E-money institutions must not facilitate or aide in fund transfers to crypto-related service providers.
The nation’s central bank head Sahap Kavcioglu revealed that they’re working on updated regulations for cryptos. He confirmed that they’re currently working “on regulations in terms of cryptocurrency” and that there are “disturbing money outflows to outside of Turkey via cryptocurrencies.”