Crypto Asset Fraud Under the TCK

Crypto Asset Fraud Under the TCK. The growing weight of crypto assets in the global financial system has inevitably brought with it the risk of these assets becoming the subject of criminal activities. Despite their decentralized nature, Turkish Criminal Law is rapidly adapting to effectively penalize crypto asset fraud and remedy victims’ losses. This report meticulously analyzes the legal qualification of crypto asset fraud, the aggravated offenses applied under the Turkish Penal Code (TCK), investor rights, and the Republic Public Prosecutor’s Office processes.

SECTION I: INTRODUCTION AND LEGAL QUALIFICATION OF CRYPTO ASSETS

1.1. The Concept of Crypto Asset and the Definition of Digital Economic Value

Crypto assets refer to assets created virtually using Distributed Ledger Technology (DLT) or similar technologies and distributed via digital networks. Their fundamental difference from traditional financial instruments lies in their non-dependence on a central authority. In Turkish Law, the legal nature of cryptocurrencies is not yet independently determined by a separate law. This necessitates the application of existing legal provisions by analogy and interpretation in judicial practice.

1.2. The Place of Crypto Assets in Turkish Law: Debates on Goods and Securities

Ongoing debates regarding the legal nature of crypto assets stem from their failure to fully fit into traditional categories. Within the framework of current legal provisions, it is not deemed possible to categorize crypto assets as securities. From the perspective of Property Law, the Turkish Civil Code requires an asset to be tangible (corporeal) for ownership rights to be established over it. The lack of tangibility in crypto assets prevents their qualification as goods in the classical sense. Nevertheless, because these assets possess economic value, they can be subject to legal transactions under the principle of contractual freedom, and their inheritance is possible as they are values quantifiable by money.

1.3. Acceptance of Crypto Assets in Criminal Law in Light of Supreme Court Decisions

In the field of criminal law, the qualification of crypto assets is vitally important in determining whether they constitute the subject matter of crimes against property, such as fraud. The established practice of the Supreme Court of Appeals and appellate courts has concluded that cryptocurrency is an “Economic Value Digital Asset”.

For an asset to be considered asset value in the criminal law sense, it is sufficient that three basic conditions are met: it must have market value, be transferable, and provide economic benefit to its owner. Since crypto assets satisfy these conditions, their acquisition through fraudulent means can be the subject of crimes against property in the TCK (fraud, theft, etc.).

The Supreme Court’s interpretation, adapting to technology, strengthens investors’ rights under criminal law. However, this legal acceptance brings procedural difficulties. The systematic of the Code of Criminal Procedure (CMK), still primarily based on concrete “movable or immovable” property, makes the seizure and recovery processes for digital assets much more complex compared to classic bank accounts. While the law has been flexible in defining the subject of the crime, it has been slow to adopt the tools necessary to manage non-physical assets, turning the process of de facto recovery (restitution) for victims into a challenging struggle requiring technical expertise.

SECTION II: ELEMENTS OF CRYPTO FRAUD OFFENSE UNDER THE TURKISH PENAL CODE (TCK)

2.1. General Framework: Simple Fraud (TCK 157) and Transition to Aggravated Fraud

Crypto asset fraud is, by nature, not just a simple lie. Because complex technologies, fake websites, or professional-looking platforms are used to convince the victims, the act is almost always evaluated as the aggravated fraud offense under TCK 158. Fraud is an intentional crime, and the mental element is intent (dolus).

The penalty for aggravated fraud is much heavier compared to simple fraud (TCK 157). Under TCK 158, the perpetrator is punished with imprisonment from three to ten years and a judicial fine (adlî para cezası) of up to five thousand days.

2.2. Main Aggravated Circumstance: Fraud by Use of Information Systems (TCK 158/1-f)

The main basis for cryptocurrency fraud cases is the provision of TCK 158/1-f (Fraud by Use of Information Systems). Crypto exchanges, wallet applications, fake websites, smart contracts, and the blockchain itself are legally accepted as “information systems”.

The perpetration of the fraudulent act via information systems ensures that the crime is prosecuted under this aggravated circumstance. Indeed, in decisions rendered by the Supreme Court of Appeals, even if the perpetrator communicates directly with the victim via mobile phone to commit fraud, the condition of using an information system can be considered met. Cyber tricks such as phishing, fake airdrops, and wallet drainers are penalized under this section.

2.3. Other Aggravated Circumstances and Concurrence of Crimes (İçtima)

Especially in large and organized crypto fraud cases, the penalties for perpetrators are often increased by the provisions on the concurrence (or accumulation) of multiple crimes (içtima).

Being a Merchant or Company Executive (TCK 158/1-h): When the founder or executive of a crypto asset service provider (CASP) commits an “Exit Scam” (stealing investor funds by abandoning the market) within the scope of their commercial activities, they are held separately liable under this aggravated circumstance.
Establishing an Organization for the Purpose of Committing a Crime (TCK 220): If the act, as seen in cases like Thodex, is committed within a hierarchical, planned, and continuous criminal organization structure, the perpetrators are additionally punished under TCK 220 (establishing, managing, or being a member of an organization).
Laundering Assets Derived from Crime (TCK 282): Sending crypto assets obtained through fraud to “mixer” or “tumbler” services to conceal their trace, or transferring them in fragmented amounts between different wallets, constitutes the crime of TCK 282 (money laundering) and requires a separate penalty.
IT Crimes (TCK 243-244): If the perpetrator gains unauthorized access to the victim’s wallet or exchange account by stealing their password (phishing), in addition to the fraud, the crimes of “Entering an Information System” and “Altering/Rendering Inaccessible Data” are also applied via the provisions on the concurrence of crimes.

In legal practice, in cases of organized fraud, the provisions on the concurrence of crimes and TCK 220 are generally prioritized over the chain of offenses provisions in TCK 43. This leads to a harsher outcome than the chain of offenses provision, which only mandates an increase in the penalty by a specific rate, by allowing the perpetrator to be penalized separately for each crime. This practice indicates the judiciary’s tendency to evaluate such systematic crimes as aggravated multiple offenses.

Table 1: Matrix of Aggravated Circumstances for Crypto Fraud under TCK 158

Aggravated Circumstance	TCK Article	Definition and Application to Crypto Cases	Typical Example
Use of Information Systems	158/1-f	Fraud committed via a fake platform, smart contract, or wallet application.	Setting up a fake exchange website, stealing private keys via Phishing.
Within Scope of Commercial Activity	158/1-h	CASP executive fraudulently withdrawing investor funds within the scope of their commercial activity.	An exchange executive committing an “Exit Scam” and leaving the market.
Criminal Organization Activity	158/3 (Additional Paragraph)	The crime being committed within the framework of a hierarchical and continuous criminal organization activity.	Large-scale and planned Ponzi/Pyramid schemes similar to Thodex.

SECTION III: LEGAL ANALYSIS OF CRYPTO FRAUD MODELS

3.1. Ponzi Schemes and Pyramid Systems

Ponzi schemes are fraudulent methods that lure investors into the system with the promise of high and guaranteed returns, financing payments to early investors with the money invested by later participants. These systems are inherently unsustainable, and fraudsters typically block user access and transfer the funds to their own accounts once the money in the exchange reaches a certain level. Since this act clearly includes the element of “fraudulent conduct” that deceives the investor with continuous profit promises, it is evaluated as aggravated fraud under TCK 158 and typically coincides with TCK 158/1-h (Exit Scam) and TCK 220 (Establishing an Organization) provisions.

3.2. “Rug Pull” and Fake Project Fraud

Rug Pull is a type of fraud that is becoming widespread, especially in the decentralized finance (DeFi) ecosystem. Fraudsters attract investors through seemingly attractive new tokens, and after a significant amount of funds is collected, they abruptly withdraw the funds (liquidity pull) and completely abandon the project. Since these actions are accepted as the project being a scam from the start and the promises being within the scope of fraudulent conduct, they are penalized under TCK 158/1-f. Other common methods include “Pig Butchering” (Romance and Confidence Fraud), Fake Airdrop and NFT fraud, and “Pump and Dump.”

3.3. Fraud Linked to Cyber Attacks

In fraud linked to cyber attacks, the perpetrator’s goal is to gain access to the victim’s private keys or exchange login credentials. Phishing and SIM Swap attacks top this category. Phishing aims to drain the victim’s wallet (Wallet Drainer) through fraudulent signature requests. Such acts constitute not only the aggravated fraud offense under TCK 158/1-f but also the unauthorized access to information systems crimes under TCK 243-244 (in concurrence).

The technical complexity of the methods used in crypto fraud (Rug Pull, Wallet Drainer) increases the burden of proof for investigating authorities and victims. The fact that the victim must prove not only that they lost money but also the fraudulent conduct and intent of the perpetrator (i.e., that the project was a scam from the beginning) with technical data (smart contract analysis, blockchain trace) demonstrates that the legal process has shifted into a highly technical domain.

SECTION IV: INVESTOR RIGHTS AND CRIMINAL INVESTIGATION PROCESS (PROSECUTION)

4.1. Filing a Criminal Complaint and Statutory Deadlines

The first and most critical step a victim realizing they have been defrauded must take is to immediately file a criminal complaint with the Republic Public Prosecutor’s Office. Time is vital in crypto crimes for preventing the loss of evidence and tracking suspicious funds.

In the simple form of the fraud offense (TCK 157), the victim must file a complaint within six months from the date they learned of the act and the perpetrator; otherwise, criminal action cannot be taken. However, because crypto fraud cases are almost always classified as aggravated crimes under TCK 158 due to the use of information systems, these crimes are generally investigated ex officio (re’sen) by the Prosecutor’s Office. While this means the victim is relieved of the six-month complaint limitation, filing a complaint without delay is still mandatory.

4.2. Importance of Victim Testimony and Proof of Fraudulent Conduct

The criminal complaint petition is the fundamental document that determines the direction of the investigation. The victim must clearly explain what promises and what fraudulent conduct they were convinced by. Petition should clearly state the demands for the identification and punishment of the perpetrator, the placing of a block/seizure on the suspicious wallet addresses and related bank accounts, and the restitution of the damage.

The submission of digital evidence plays a key role in this process. All collected evidence (screenshots, communication records, TXIDs, wallet addresses) should be saved onto a CD/USB drive and printed out to be appended to the petition. Even though the Prosecutor’s Office has the authority to act ex officio, the effective use of this authority in IT crimes depends on the concrete and reliable digital data provided by the victim. Inadequate evidence submission by victims who do not receive legal assistance can seriously slow down the progress of the investigation.

4.3. Intersection of Criminal and Tort Law (Liability for Unlawful Act)

Victims have the right to claim their material damages independently of the criminal trial process. Since the act of cryptocurrency fraud constitutes an unlawful act within the context of the Turkish Code of Obligations (TBK), victims can recover the money by filing a compensation lawsuit against the perpetrator for the amount of damage suffered.

While the criminal investigation is concerned with the perpetrator’s penal sanction (imprisonment, judicial fine), the civil (compensation) lawsuit directly aims at recovering the material damage. Parallel execution of these two processes is a critical strategy for the full protection of investor rights and increasing the probability of damage collection.

Table 2: Step-by-Step Legal Application Checklist for Crypto Fraud Victims

Phase	Action/Demand	Legal Basis	Required Digital Evidence
1. Preparation	Secure (immutable) recording of evidence.	Code of Civil Procedure	Screenshots, communication records (Telegram, email), fake website URLs.
2. Criminal Complaint	Complaint to the Republic Public Prosecutor’s Office for ‘Aggravated Fraud’.	TCK m. 158, CMK	TXID (Transaction ID), Sender/Receiver Wallet Addresses, Crypto Transfer Time Information.
3. Protective Measure	Demand for a block/seizure order on suspicious wallet addresses and related bank accounts.	CMK m. 128/134	Suspicious wallet addresses, related bank/payment institution account information.
4. Restitution Demand	Restitution of seized assets (if no connection to the crime).	CMK m. 131, TCK m. 55	Documentation of the severance of the crime connection via MASAK/Expert reports.
5. Compensation	Filing a Material Damage Compensation lawsuit against the perpetrator.	Turkish Code of Obligations (TBK)	Calculated amount of suffered damage in Turkish Lira.

SECTION V: PROTECTIVE MEASURES AND ASSET RECOVERY

5.1. Procedure for Seizure of Crypto Assets (CMK m. 128 and m. 134)

The acceptance of crypto assets as asset values provides the legal ground for applying protective measures to these assets. Seizure decisions are issued by the Magistrate Judge (Sulh Ceza Hakimliği) pursuant to CMK m. 128 (Seizure of immovable properties, rights, and receivables) and CMK m. 134 (Search and seizure in information systems). In practice, Prosecutor’s Offices generally use the “judicial order via wallet address” method to reach funds held at centralized Crypto Asset Service Providers (CASPs).

5.2. Preservation of Seized Crypto Assets and Technical Difficulties

The process of seizing crypto assets is technically more complex than seizing physical goods. Legally, the seizure measure can only be applied to assets proven to be connected with the crime. Otherwise, the right to property guaranteed by the European Convention on Human Rights (ECHR Protocol No. 1, Article 1) would be violated. Seizure of assets in decentralized exchanges (DEXs) and personal (self-custody) wallets is a more challenging process due to the technical and legal cooperation requirements.

5.3. Restitution of Assets: Condition of Severing the Connection with the Crime

The most crucial stage for remedying the victim’s loss is the restitution of the seized assets to their owner. Pursuant to CMK m. 131, the restitution of seized assets to their owner is a necessity when they are no longer required for the investigation or prosecution, or when their connection to the crime is severed. TCK m. 55 stipulates that the confiscation of proceeds derived from the crime cannot be applied unless their connection to the crime is proven.

The landmark decisions of the 7th Criminal Chamber of the Supreme Court of Appeals emphasized that crypto assets are also protected by property guarantees, just like classical goods, and must be returned if there is insufficient evidence that the seized asset value was derived from the crime. In the restitution process, courts request the local exchanges to lift the block on the relevant wallet and require documentation of the severance of the crime connection via a MASAK report or an expert report. Specifically, for the restitution of assets held at foreign exchanges, a “release order” may need to be issued within the scope of international judicial assistance (MLAT).

SECTION VI: REGULATION, NATIONAL AND INTERNATIONAL COOPERATION

6.1. AML (Anti-Money Laundering) Obligations of CASPs

Crypto Asset Service Providers (CASPs) have significant obligations regarding the prevention of money laundering (AML) and the financing of terrorism (CFT). MASAK has published guides for these entities, outlining the fundamental principles of these obligations. CASPs are subject to strict legal scrutiny to facilitate the tracking of criminal activity.

6.2. Suspicious Transaction Reporting (STR) Process

The main obligations imposed on CASPs by MASAK include: Customer Due Diligence (CDD), Suspicious Transaction Reporting (STR), Obligation to Provide Information and Documents, Obligation of Preservation and Submission, and Obligation of Continuous Information Provision. CASPs must thoroughly investigate and evaluate suspicious transactions and report them to the MASAK Presidency no later than ten business daysfrom the date the suspicion arose, or immediately in urgent cases. These obligations play a critical role in the early detection and tracking of fraud cases.

6.3. International Judicial Assistance in Cross-Border Fraud

The cross-border nature of crypto asset fraud necessitates international cooperation. As a G-20 member, Turkey complies with the recommendations of the Financial Action Task Force (FATF); these recommendations mandate that AML and CFT obligations cover crypto assets as well.

In cases where funds are transferred to centralized or decentralized platforms abroad, international judicial cooperation mechanisms (MLAT – Mutual Legal Assistance Treaties) are activated. Lifting a block or issuing a restitution decision regarding a foreign exchange is possible through official requests (release orders) sent under the MLAT framework.

While the national AML/CFT regime over CASPs increases preventive power, the transfer of funds across borders limits the speed of de facto damage recovery for victims by the efficiency of MLAT processes. This causes the restitution process to be prolonged due to the bureaucratic structure of international judicial mechanisms.

SECTION VII: CONCLUSION AND LEGAL FORESIGHTS

Thanks to TCK 158/1-f and the Supreme Court’s jurisprudence accepting crypto assets as digital assets, Turkish Criminal Law has established a robust and compliant legal framework against crypto fraud offenses. This facilitates the application of penal sanctions, ensuring perpetrators face heavy penalties.

However, the decentralized and rapidly transferable nature of crypto assets creates difficulties, especially in asset recovery (restitution) processes. Turkey’s close monitoring of international regulations (such as FATF and the European Union’s MiCA proposal) indicates that obligations (operational security and supervision) for CASPs will increase in the future. Updating the current CMK systematic with special regulations that include technical solutions better suited to the nature of digital assets is a critical necessity for speeding up the seizure and restitution processes.

The critical legal strategies investors must follow to protect their rights are:

Speed and Evidence: Upon realizing the fraud, a swift application must be made to the Republic Public Prosecutor’s Office, and blockchain data such as TXID and wallet addresses must be submitted completely.
Dual-Track Fight: Investors must pursue the criminal investigation for the perpetrator’s punishment while simultaneously filing a compensation lawsuit under the Turkish Code of Obligations for the recovery of the material damage suffered. This dual strategy is a mandatory legal approach that strengthens the likelihood of actual collection. (KW: kripto dolandırıcılık hukuku)

Legal Regulations in Turkey Cryptocurrency Exchange

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