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How an alleged Dogecoin scam in Turkey saw crypto investors lose €100 million

A scammer has allegedly managed to steal $119 million (€100 million) from investors in Turkey by promising massive returns from Dogecoin mining
A scammer has allegedly managed to steal $119 million (€100 million) from investors in Turkey by promising massive returns from Dogecoin mining   -   Copyright  AP Photo
By Pascale Davies

A scammer has allegedly managed to steal $119 million (€100 million) from investors in Turkey by promising massive returns from Dogecoin mining, according to Turkish media.

Police identified the online pseudonym “Turgut V”, who it believes is behind the scheme, according to local news channel TV100.

It is believed that Turgut and 11 associates managed to gather almost 350 million Dogecoin valued at $119 million from 1,500 people before disappearing.

Turkish broadcaster NTV said Turgut V convinced investors, via Zoom calls and at in-person networking meetings at luxury locations, to buy Dogecoin and hand them over to invest in mining technology, promising huge returns.

What were the investors promised?

Reports said investors were told they would see a 100 per cent return in 40 days.

One victim said the system was working well for three months and early investors said they had received the returns as promised. But after the scheme peaked at 350 million Dogecoin in the fourth month, the funds were said to have disappeared.

They were told the Dogecoin they sent would purchase new equipment to mine DOGE. Dogecoins are made through a system called Proof of Work mining, the same system used by Bitcoin. Proof of Work means miners are compensated with coins in exchange for validating transactions and by solving equations to build the next block.

What is Dogecoin?

Dogecoin is currently the seventh largest cryptocurrency. Although it is now one of the most valuable cryptos, it was originally created as a parody of Bitcoin.

Getty via Canva
Crypto trading has seen a boom in Turkey since the lire plummeted.Getty via Canva

Dogecoin, inspired by the popular ‘doge’ meme, was developed in 2013 by Billy Markus and Jackson Palmer, two software engineers who worked for IBM and Adobe respectively.

Will the scammers be caught?

An investigation to find Turgut and the 11 associates is underway by the Chief Public Prosecutor’s Office in the Istanbul suburb of Küçükçekmece.

Turkish authorities have also issued an order to bar Turgut and his partner Gizem N. from leaving the country.

The rise of cryptos in Turkey

Turkey has seen a boom in cryptocurrency trading in the last year, since the fall of its lira currency and rising inflation.

Data from the US Chainalysis analysed by Reuters showed that between the start of February and March 24, trading volumes in Turkey reached 218 billion lira (€22 billion).

But there has also been crypto-related fraud and scammers in action.

In April, the Turkish cryptocurrency exchange Thodex abruptly ended its operations and its chief executive officer and founder Faruk Fatih Özer fled the country amid allegations that hundreds of millions of dollars were stolen. Dozens of suspects have been arrested but Özer’s whereabouts is still unknown. He is believed to hold nearly 22 million Turkish lira (€2.2 million) on two local crypto exchanges.

In the same month, four employees of the Vebitcoin exchange were arrested following allegations of fraud, a day after the exchange said it would end its operations.