Analyzing the Turkish cryptocurrency Ponzi scheme: Suspected funds exceeding 100 million USD, 127 suspects detained
The Turkish Interior Minister revealed that authorities conducted a large-scale operation in Ankara against a cryptocurrency scam project, detaining 127 suspects and seizing a large amount of assets as well as several firearms.Author: Beosin
Previously, it was reported that as Turkey pursues cryptocurrency freedom, some issues have become increasingly apparent. The most criticized aspect is the illegal activities of certain local crypto projects, which have caused significant losses for investors.
On May 30, 2024, Turkey's Interior Minister revealed that authorities conducted a large-scale operation against a cryptocurrency scam project in Ankara, detaining 127 suspects and seizing a large amount of assets and several firearms.
The project involved is called Smart Trade Coin. Since 2021, Turkish investors have been protesting and condemning the practices of this project, which is suspected of being a scam. According to victim lawyers, the number of users deceived by this project has reached 50,000, with losses exceeding $2 billion.
What is Smart Trade Coin (STC)?
Smart Trade Coin claims to provide software that connects to multiple cryptocurrency exchanges. It claims to help users manage multiple cryptocurrency exchange accounts through a single application, allowing them to:
Use all exchanges through a single interface,
Configure automated trading bots for automatic trading, earning profits by arbitraging price differences between exchanges, as shown below:
Is Smart Trade Coin (STC) a scam?
In 2023, Cem Dilmegani, the chief analyst at AI Multiple, shared a research article about the project on the Ai Multiple platform, repeatedly stating that the project is likely a cryptocurrency scam, with many users below reporting that they have been defrauded of large sums of money.
In the app store, about half of the reviewers claim that the application is a scam.
Many users reported that they lost 95% of their savings, and users lost their savings without being able to verify that the funds were not taken by the Smart Trade Coin (STC) team.
Through Beosin KYT on-chain analysis, we identified some suspected scam addresses used to store and transfer stolen funds.
Since the flow of stolen funds and addresses has not been disclosed, we conducted relevant money laundering analysis and tracking of the stolen funds based on the project name Smart Trade Coin using Beosin KYT.
From the chart, we can see that the STC token contract distributed the main funds through the address 0x5f45 to the address 0xc12c. Based on the extended trading method, we can see that this address has conducted a large number of one-way ETH outflow transactions, involving substantial funds, close to the announced estimated loss amount, and the transaction fees for the outflowing ETH addresses all came from the 0xc12c address, so we have reason to suspect that this address is used for distributing stolen funds.
The chart only shows a small portion of the fund flow, with this address involved in over 20,000 outflow transactions. Based on this small portion of transactions, it can be seen that after distributing funds, some of the funds directly flowed to various exchanges, while others were transferred, aggregated, and dispersed through multiple layers, ultimately still flowing into exchanges.
Should a corresponding regulatory framework be established locally?
The Kocaeli Newspaper reported on dozens of criminal lawsuits filed against the cryptocurrency trading platform. In 2021, 50 people gathered in front of the Ankara courthouse to protest Smart Trade Coin and its team.
Victim lawyer Yagiz Kaya stated that the company deceived over 50,000 people in Turkey. At that time, despite multiple complaints being filed and investors' losses estimated at $2 billion, the company took no action.
Additionally, some victims claimed they were encouraged to take out loans and sell their homes or cars to earn "36% monthly profits."
Most clients not only did not receive huge profits but ended up empty-handed and heavily in debt.
AI Multiple chief analyst Cem Dilmegani pointed out that the company's claims are unrealistic. The now-defunct website claimed to "provide software that connects multiple cryptocurrency exchanges" and "help users manage multiple cryptocurrency exchange accounts through a single application."
Even if this company developed technology to achieve sustained profits through arbitrage, it would not market itself to retail investors. It would raise funds and engage in large-scale arbitrage.
Finally, the analyst emphasized that the company's opaque business practices, deceptive marketing, and lack of information indicate that the company was a scam from the very beginning.
This incident has made various sectors of Turkish society realize that merely pursuing cryptocurrency freedom is not enough; a corresponding regulatory framework must be established. Only in a compliant and transparent environment can the cryptocurrency industry truly gain the trust and adoption of the public.
Therefore, on the path of cryptocurrency regulation in Turkey, the government and the industry need to cooperate with each other to seek a balance between protecting investor rights, preventing financial risks, and safeguarding innovative development. Only by adhering to compliant operations can cryptocurrency truly become a powerful tool for promoting economic freedom and value preservation.
