Turkey is in the news for another crypto scam following two successive scams in April. In the latest scam, investors are reported to have lost $119 million worth of meme token, Dogecoin. According to reports, they were required to commit their Dogecoin tokens to a scheme termed ‘Dogecoin mining.’
Turkish authorities are investigating the incident, but the mastermind and his associates behind the Dogecoin scheme are still at large. The mastermind operated the scheme under the name Turgut V., a pseudonym and solicited Dogecoin investments from about 1500 investors within the country, pooling about 350 million Dogecoin estimated to be $119 million before vanishing.
‘Dogecoin Mining’ Scheme Promised Investors 100% as Dividends
Investors were reportedly promised 100% returns within 40 days, adopting the same modus operandi as previous cryptocurrency scams. Turgut V. gathered the affected investors in a Telegram group after pitching the scheme to each of them at luxurious venues. This was done to earn their trust and build personal relationships with every investor.
Turgut’s Dogecoin mining scam would go on for 3 months, within which investors were paid their 100% returns as promised. This attracted other investors who thought the scheme was genuine, until their numbers arrived at 1500. However, things took a turn for the worse in the fourth month, when the scheme stopped paying and communication channels were blocked such that investors could not reach Turgut and the 11 other associates.
Beyond the scam, Dogecoin mining is genuine as the meme token is mined just like Bitcoin through the Proof-of-Work (PoW) algorithm. The PoW algorithm allows miners to validate transactions and add blocks by solving mathematical problems. Any miner who is able to successfully solve the problem and add the next block receives the reward contained in that block.
In their efforts to crack down on the suspects, authorities have released a restriction order in a bid to prevent Turgut V and other suspects from leaving the country.
Turkish Investors Battle With Crypto Scams
The pace of crypto adoption in Turkey is being matched by the emergence of crypto scams. Back in April, Turkish prosecutors had arrested six suspects responsible for the shutdown of a domestic crypto exchange, Thodex. While the exchange still operated, it was run by three siblings. In the wake of the collapse, withdrawal services were deactivated, and users could not access the funds.
Still in April, Turkish authorities issued arrest warrants on four employees of Vebitcoin, another crypto exchange, for fraud allegations. Vebitcoin had announced the previous day that it was closing operations.
The latest scam in Turkey joins a myriad of crypto scams that have occurred globally. Earlier in August, a Bitcoin scam had occurred in South Africa, seeing investors lose millions in Bitcoins for outrageous returns. The 350 million Dogecoins currently in the possession of the Turkish suspects will not have a significant effect on the price of the token, if sold off as Dogecoin has no total supply, but has a circulating supply of 130 billion.