Turkish prosecutors investigate alleged $119M Dogecoin mining scam

Turkish media reports that authorities there are investigating an alleged Dogecoin mining scam that  pulled the rug on investors after amassing $119 million worth of deposits.

An Aug. 23rd report from local channel TV100 broke the news, with police identifying pseudonymous online avatar “Turgut V.” as the scheme’s suspected operator.

Authorities believe that Turgut and 11 associates managed to gather close to 350 million Dogecoin valued at $119 million before disappearing.

Turgut reportedly solicited investments from 1,500 Turkish citizens, drumming up excitement for the Dogecoin “mining” operation at in-person networking events held at ritzy locations, and by using a Telegram group online. Investors were promised returns of 100% in 40 days and reportedly paid returns for around 3 months.

Investors were told that the Dogecoin they sent would procure new equipment to mine DOGE. Similar to Bitcoin, Dogecoins are created through Proof-of-Work mining, where network participants compete to validate transactions and produce the next block by computationally solving complex equations. The miner that solves the equation mines the network’s next block, also receiving all of the crypto contained within it as a reward.

The operation ran smoothly for its first three months, with early investors receiving their returns as promised. However, after the scheme’s total value locked (TVL) peaked at 350 million Dogecoin during its fourth month, the funds reportedly disappeared.

The Chief Public Prosecutor’s Office of the Turkish suburb Küçükçekmece is now carrying out an ongoing investigation to locate Turgut and his 11 associates. Authorities have issued an order restricting Turgut and his partner Gizem N. from traveling outside the country.

Related: Australians lost over $25 million to bogus crypto investments

The recently surging popularity of crypto assets in Turkey has brought with it an increase in scammers seeking to leverage digital assets to dupe victims out of their hard-earned cash.

At the end of April, Turkish authorities jailed six suspects associated with the collapse of local crypto exchange Thodex. The exchange had abruptly halted withdrawal services earlier that month, stranding users’ funds on the platform.

Also in April, four employees of the local Vebitcoin exchange were arrested for allegations of fraud just a day after Vebitcoin announced it would cease operations.