Turkey’s Thodex and Vebitcoin Failures Trigger an Exchange Crisis
Within days of each other, Turkish exchanges Thodex and Vebitcoin halted customer access and became the subjects of criminal or financial investigations. The episode intensified concern about centralized-exchange custody just as Turkey was tightening its cryptocurrency rules.
In late April 2021, two Turkish cryptocurrency exchanges failed in rapid succession. Thodex stopped trading and withdrawals as authorities opened an investigation and sought founder Faruk Fatih Özer, while police detained dozens of people connected to the case. Days later Vebitcoin also stopped operations, citing financial strain, and Turkish authorities blocked company accounts and detained senior personnel.
Early reports attached very large and sometimes conflicting loss estimates to Thodex. Those figures were not sufficiently stable to treat the most sensational estimates as established fact, so the historically durable point is the sudden loss of customer access, the law-enforcement response and the back-to-back failure of two domestic venues.
The episode landed immediately after Turkey's central bank prohibited the use of crypto assets for payments. For Bitcoin users it reinforced the distinction between owning Bitcoin and relying on a centralized intermediary to custody it: the Bitcoin network continued operating, while customers of the failed exchanges faced the counterparty and withdrawal risks of the platforms holding their assets.