Reasoned decision released in fraud case against Thodex founder Faruk Fatih Özer

The 508-page reasoned decision, prepared by the Anadolu 9th High Criminal Court and served to the parties, includes the defenses presented during the trial, the indictment and opinion of the public prosecutor, and the evidence.

The decision stated that Koineks Teknoloji AŞ was established on September 20, 2017, with a capital of 400 thousand liras, and that the founder and manager of the company was the defendant Faruk Fatih Özer.

The decision noted that Koineks Teknoloji AŞ, known as the Thodex Platform, was a crypto asset service provider. It explained that crypto asset service providers fundamentally offer their customers the ability to trade between crypto assets and the Turkish lira or other fiat currencies, crypto asset transfer services, and crypto asset custody services on behalf of their customers.

The decision recorded that these service providers allow customers to trade with each other on the platform, which is referred to as a "crypto exchange."

Stating that the price emerging based on the supply and demand of the asset subject to trade constitutes the current price of the asset, the decision included the following: "While the number of crypto assets today is expressed in the thousands, it is understood that not every type of crypto asset is traded on all crypto exchanges, and that crypto exchanges generally trade crypto assets that are frequently demanded by customers and have high liquidity."

VICTIMS DECEIVED BY ADS AND PROMOTIONS

The reasoned decision pointed out that famous individuals recognized by the public were used in Thodex's advertising and promotional activities.

It was noted that the victims, deceived by internet ads and television commercials claiming that Thodex would offer higher profit opportunities compared to other crypto exchanges in various ways, had their will corrupted in this manner.

The decision stated that Thodex selling assets to its customers that did not actually exist, and failing to inform customers that their assets were being moved to cold wallets by the platform, were evaluated as fraudulent actions.

It was emphasized that this criminal organization, established under the name and umbrella of Thodex, increased customer trust in the company during the initial phase of the system by responding to online transactions that customers wanted to perform via Thodex instantly or within the expected timeframe.

The decision reported that the organization increased the number of its existing customers thanks to this deceptive trust, promotional promises, and manipulations in the system, and stated: "When the real assets obtained from customers reached the expected saturation point within the company, it was suddenly terminated; the customer/victim assets, which had already been transferred to cold wallets and were currently inaccessible, were seized by the defendants in this way."

"A COLD WALLET IS A PHYSICALLY SMALL AND PORTABLE DEVICE, BUT ACCESSIBLE ONLY WITH A PASSWORD"

The reasoned decision drew attention to the fact that, compared to other asset values, crypto assets are much easier to subject to transactions in a way that limits their traceability or makes them untraceable.

In the decision, where the terms cold and hot wallet are explained, the following was recorded:

"If one were to compare the operation of the crypto asset exchange named Thodex and other crypto asset exchanges to a bank; it is evaluated that the money deposited by customers in a bank is kept in the teller's drawer for a certain period of time to be accepted during the day and paid out immediately upon the request of another customer, and the teller's drawer can be compared to a hot wallet in terms of a crypto asset exchange. The cold wallet, which is the encrypted medium to which assets accumulated in the teller's drawer, i.e., the hot wallet, are transferred due to reasons such as cyberattacks because it is away from an internet connection, can be compared to a bank vault. It is understood that a cold wallet is a physically small and portable device, but accessible only with a password. In Thodex, the money deposited by customers is first transferred to the hot wallet, which is considered the teller's drawer."

The decision stated that the act of transferring crypto assets from the hot wallet, which can be considered Thodex's teller's drawer, to the cold wallet, which is considered Thodex's vault that cannot be cracked, and giving these assets to different companies to purchase gold in return, constitutes the crime of "laundering assets derived from crime."

THEY SOLD THEIR CUSTOMERS ASSETS THAT DID NOT ACTUALLY EXIST

It was stated that Thodex selling assets to its customers that did not actually exist and failing to inform customers that their assets were being moved to cold wallets by the platform were evaluated as fraudulent actions.

The decision stated that the defendants Faruk Fatih, Güven, and Serap Özer intended to establish and manage the organization through the Thodex platform from the initial stage.

Noting that these defendants did not have the necessary technical knowledge and training to carry out fraud and money laundering operations within the organization, the decision included information that they therefore used other defendants who were members of the organization, Ergün Acar, Mesut Can Arbaz, Cem Uzunoğlu, and Onur Can Gündüz, for technical work and software.

The decision explained that the defendant members of the organization implemented the system programming, software, and other technical needs necessary for the organization to commit fraud and money laundering crimes in line with the orders and instructions they received from the managers.

"NO REDUCTION WAS APPLIED TO THE SENTENCES AS THE DEFENDANTS SHOWED NO REMORSE"

In the decision, which also included evaluations regarding the sentences given to the defendants, it was stated that the defendants were punished for this crime on the grounds that a firm conscientious conviction had been formed in the court that Faruk Fatih Özer and his siblings Güven Özer and Serap Özer were the managers of the organization established to commit crimes.

The reasoned decision stated: "It is understood that the defendants did not show any sign of genuine remorse for the crime during the ongoing trial process, and that they acted in a way that tried to exonerate themselves and the organization managers before them by defending themselves with an organizational consciousness; therefore, no discretionary reduction was applied to the defendants' sentences."

DEFENDANTS WERE FINED OVER 26 BILLION LIRAS

The Anadolu 9th High Criminal Court announced its verdict on the "fraud" case at the cryptocurrency exchange Thodex, in which 21 defendants, 7 of whom were in custody, were tried, on September 7, 2023.

The court sentenced the detained defendants Faruk Fatih Özer, Güven Özer, and Serap Özer to 11,196 years, 10 months, and 15 days in prison each for the crimes of "establishing, managing, and being a member of an organization," "qualified fraud," "laundering assets," and "fraud using information systems."

The panel, which gave prison sentences of varying lengths to other defendants for various crimes, acquitted 16 defendants of the charge of "qualified fraud" on the grounds of insufficient evidence.

On the other hand, the court imposed a total judicial fine of 26 billion 615 million 25 thousand liras on the defendants Faruk Fatih Özer, Güven Özer, and Serap Özer, with 8 billion 871 million 675 thousand liras each. The panel ruled that a portion of the fines imposed should be paid in 24 monthly installments.