Turkey’s Vebitcoin is the second exchange to collapse after central bank's crypto payments ban

Exchanges • April 26, 2021, 1:21PM EDT
UPDATED: April 26, 2021, 1:23PM EDT
The Block

Turkish crypto exchange Vebitcoin announced Friday that it ceased operations, making it the second Turkish venue to collapse after the nation's central bank barred cryptocurrency as a payment option earlier this month.

“We would like to state with regret that this situation has led us to a very difficult process in the financial field,” the company said in a translated statement. “We have decided to cease our activities in order to fulfill all regulations and claims.”

Soon after it decided to cease operations, four people from Vebitcoin were detained on fraud charges, according to a Turkish prosecutor cited by Reuters. Turkey's Financial Crimes Investigation Board (MASAK) also blocked onshore bank accounts associated with the exchange.

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The Central Bank of the Republic of Turkey (CBRT) barred cryptocurrency as a payment option on April 16, citing reasons including crypto’s association with crime and its unregulated financial market. Specifically, payment service providers are not allowed to incorporate crypto assets directly or indirectly into their business models.

The first exchange to falter was Thodex on April 18. The exchange’s CEO, Faruk Fatih Ozer, allegedly traveled to Albania in the days after with $2 billion in investor’s funds to flee fraud charges — though that has been disputed on the Thodex website. Still, local police arrested 68 people as of Sunday for their links to Thodex, according to the state-run Turkish news agency Anadolu. MASAK has since opened an investigation and blocked the exchange's bank accounts.

Turkey’s legislation against cryptocurrency will go into effect on April 30, though it is not intended as a direct prohibition, said CBRT Governor Şahap Kavacıoğlu on the state-run channel TRT. He suggested that crypto’s legal definition and the method in which institutions should hold crypto assets will be clarified, reports Decrypt.  

While the CBRT’s stance on crypto payments is clear, the Bank plans to pilot a central bank digital currency (CBDC) sometime the second half of 2021 — a year later than originally planned. CBRT Chairman Naci Ağbal told Turkish news site Koin Bülteni that the research and development phase of the project is in motion and the "conceptual phase" has been completed. 

About Author

MK Manoylov has been a reporter for The Block since 2020 — joining just before bitcoin surpassed $20,000 for the first time. Since then, MK has written nearly 1,000 articles for the publication, covering any and all crypto news but with a penchant toward NFT, metaverse, web3 gaming, funding, crime, hack and crypto ecosystem stories. MK holds a graduate degree from New York University's Science, Health and Environmental Reporting Program (SHERP) and has also covered health topics for WebMD and Insider. You can follow MK on X @MManoylov and on LinkedIn.