Turkey encryption eyewash case: 127 people arrested, losses may exceed 2 billion USD

The Turkish cryptocurrency industry has recently suffered a heavy blow. On May 30, the Turkish Interior Minister announced that authorities launched a large-scale operation in Ankara against a cryptocurrency project suspected of eyewash, detaining 127 suspects and seizing a large amount of assets and firearms.

The project known as Smart Trade Coin has been controversial since 2021. It has been reported that the project may have deceived around 50,000 investors, resulting in estimated losses of over $2 billion.

Smart Trade Coin claims to provide software that can connect to multiple encryption exchanges, allowing users to manage multiple exchange accounts through a single interface and set up automated trading bots for arbitrage. However, many signs indicate that this is likely a carefully orchestrated eyewash.

Multiple analysts have pointed out that the project's promises are overly exaggerated, lack transparency, and involve several suspicious behaviors. For example, some victims claimed they were induced to take out loans or sell properties to invest, with the promise of "36% monthly profits." However, most people not only did not profit but instead suffered significant losses.

Through on-chain analysis, we have identified some addresses that may be used to transfer stolen funds. These addresses have conducted a large number of one-way ETH outflow transactions, involving a massive amount of funds, which is close to the estimated loss amount. The flow of funds indicates that a portion of the funds directly flows into major exchanges, while another portion enters exchanges after multiple layers of transfers.

This case has sparked widespread discussion in Turkish society about the regulation of cryptocurrencies. Many believe that merely pursuing the freedom of cryptocurrencies is not enough; a sound regulatory framework must be established to seek a balance between protecting investors, preventing risks, and encouraging innovation. Only in a compliant and transparent environment can the cryptocurrency industry truly gain public trust and acceptance.

The Turkish government and the encryption industry face a daunting task that requires joint efforts to build a regulatory framework that upholds financial stability while promoting innovative development. Only in this way can cryptocurrencies become effective tools for driving economic freedom and value preservation.