Turkey's fourth biggest crypto exchange collapses

Vebitcoin, which had close to $60 million in daily volumes, has halted operations citing deteriorating financial conditions

More than half of Turkish cryptocurrency exchange Vebitcoin’s volume came from Bitcoin, which dropped 19 per cent this week. Getty

Turkey’s cryptocurrency investors were dealt another blow at the end of a dismal week after a second big exchange collapsed in as many days and its chief executive was reportedly detained.

Vebitcoin has halted operations citing deteriorating financial conditions, and Demiroren News Agency said its chief executive Ilker Bas and three other employees have been detained. The Financial Crimes Investigation Board has blocked Vebitcoin’s accounts and opened a probe.

Vebitcoin is Turkey’s fourth biggest exchange with close to $60 million in daily volumes, according to CoinGecko.com which tracks data on price, volume and market value on crypto markets. More than half of this volume came from Bitcoin, which dropped 19 per cent this week.

This week’s rout marks the worst period for Bitcoin since it tumbled amid a wider slump in risk assets at the end of February and analysts have warned of further losses. Even digital currencies that managed to eke out gains over the past few days, like Ether and Dogecoin, tumbled on Friday.

Vebitcoin’s collapse comes days after Thodex halted operations and its 27-year-old founder fled the country. Thodex had about 390,000 users according to a lawyer for the victims and losses could be as high as $2 billion, according to Turkey’s Haberturk newspaper.

The two exchanges were part of the cryptocurrency boom that has drawn in legions of Turks seeking to protect their savings from rampant inflation and an unstable currency. Inflation hit 16.2 per cent in March, more than three times the central bank’s target, and the lira has weakened more than 10 per cent against the dollar this year - its ninth consecutive year of losses.

The daily volume of trade in Turkish crypto markets was close to $2bn for Friday, according to data from CoinGecko.com. The boom has drawn attention from regulators.

Turkey’s Central Bank has banned cryptocurrencies as a form of payment from April 30, and the country has prohibited payment and electronic money institutions from mediating money transfers to cryptocurrency platforms.

Central Bank chief Sahap Kavcioglu said more regulations are in the pipeline in a televised interview on Friday. “We are working on regulations in terms of cryptocurrency,” he said. “There are disturbing money outflows to outside of Turkey via cryptocurrencies.”