Thodex CEO Gets 7-Month Prison Sentence On Charges Of Tax Evasion

Table of Contents

• A Protracted Court Case
• Ozer Maintains Innocence
• Problems Continue To Mount
• Tax Evasion A Major Issue

The founder and former CEO of the now-defunct Thodex cryptocurrency exchange has received a seven-month prison sentence after he failed to submit relevant documents requested during the trial.

Turkish prosecutors had initially sought a jail sentence of up to five years on smuggling charges under the country’s Tax Procedure Law.

A Protracted Court Case

Thodex was one of the most prominent cryptocurrency exchanges operating in Turkey. However, the exchange abruptly shut down, with Faruk Fatih Ozer, the CEO of the exchange, fleeing to Albania. After Interpol issued a Red Notice, Ozer was deported back to Turkey and faced fraud charges for pocketing over $2 billion in client funds when Thodex shut down. The CEO and 21 other defendants face charges that include alleged fraud, money laundering, and operating a complex criminal network using Thodex. Ozer could face a significantly longer and more severe punishment if found guilty.

Ozer Maintains Innocence

The case was heard at the Anatolian 17th Criminal Court of First Instance, with magistrates initially sentencing Ozer to one and a half years in prison. However, this sentence was reduced after the court considered his social relations, behavior, and potential impact on his future. Ozer has maintained his innocence throughout the duration of the trial, which began in October 2021. Turkish authorities had asked the former CEO to submit documents related to his activities at Thodex to the Tax Inspection Board.

However, Ozer was unable to present the required documents within the stipulated time frame. Instead, he denied the charges, claiming that he had been framed and stating that the company was hacked. He also denied being a Thodex official at the time, claiming that a trustee had been appointed to oversee the exchange and business in his absence, preventing him from sharing the requested records. Ozer has also maintained that former employees, including his brother and sister, who were arrested in 2021, were unlawfully imprisoned.

Problems Continue To Mount

Ozer faces a number of other accusations, which could see the former CEO spend the rest of his life in prison. Prosecutors and investors have insisted that he had a key role in the collapse of the Thodex exchange. Thodex collapsed in 2021 when the platform abruptly stopped all services. As a result, over 400,000 customers were unable to withdraw their funds, with prosecutors alleging that Ozer made off with over $2 billion in customer funds. However, after being on the run for over a year, he was detained in Albania, with Albanian and Turkish officials negotiating his deportation.

Officials had initially sought a five year prison sentence for Ozer under the country’s stringent Tax Procedure Law.

Tax Evasion A Major Issue

According to a study by Swedish crypto tax firm Divly, 99.5% of crypto investors did not end up paying taxes in 2022. The report states that Finland had the highest number of investors that paid the requisite taxes on their crypto investments, with the number just over 4%. Australia and Austria followed close behind with 3.65% and 2.75%, respectively, followed by Germany, the United Kingdom, Norway, Japan, Sweden, Canada, and the United States. Countries at the lower end of the table, such as India, Indonesia, and the Philippines, have only 0.07%, 0.04%, and 0.03% of crypto investors that paid taxes in 2022.

However, the report has also received considerable criticism, with many questioning the methodology used to arrive at the estimates mentioned in the report. The report itself notes that search volume data may not accurately reflect the actual number of taxpayers from the crypto ecosystem.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.