Block.one ICO damages ‘far beyond’ $22M, ENF founder says
The latest legal action against Block.one (B1), the creator and original seller of EOS (EOS), could potentially help plaintiffs get higher compensation, according to EOS Network Foundation (ENF) founder and CEO Yves La Rose.
On July 25, La Rose officially announced that ENF is preparing a lawsuit against Block.one for its failure to follow through on its $1-billion following its $4.1-billion raise in 2018.
The CEO argued that Block.one’s broken promises to invest $1 billion caused major issues for the EOS community and promised to hold the firm accountable.
As many investors have already been part of another class action against Block.one, a number of those might need to opt out of their current lawsuits, La Rose said.
“They would do that if they aren’t satisfied with the current settlement offer and believe their interests are better suited by opting out, which is a common practice,” the ENF founder told Cointelegraph.
La Rose added that opting out of an old class lawsuit could result in “obtaining a higher payout,” but it could also result in receiving nothing.
“There are no guarantees, which is why this is a personal choice they need to make,” the ENF founder noted, reiterating that the firm recommends any person consult their own legal counsel to determine which path is best for them.
La Rose also emphasized that the amount of settlement in the current class action might not be enough for those who were affected. He stated:
“Not everyone is covered in the current class, and so this new contemplated action also widens the pool of potential participants. Also, the measly $22 million that Block.one offered is pathetic. The damages caused on a $4-billion raise are far beyond what is being offered in reparations.”
Block.one’s EOS initial coin offering (ICO) became one of the largest crowdfunding raises in history, raising as much as $4.1 billion by June 2018 and outstripping Telegram’s $1.7 billion ICO.
By the end of its year-long crowdsale, EOS was trading at around $12, or around 44% down from its peak price recorded in April 2018. The cryptocurrency then experienced a couple of ups and downs, eventually plummeting all the way down below $1. At the time of writing, EOS is trading at $0.74, down roughly 30% over the past year.
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Despite a massive decline, EOS is still one of the biggest cryptocurrencies by market capitalization, which amounts to $827 million at the time of writing. That makes the EOS cryptocurrency the 54th largest coin by market value, according to CoinGecko.
In 2019, Block.one agreed to pay a $24-million civil fine to settle with the United States Securities and Exchange Commission over charges that it held an unregistered ICO. A few months later, disgruntled investors started a class-action lawsuit against Block.one, arguing that the firm deceived tokenholders about its financial history, operations and budget, as well as executive compensation, material trends, risk factors and others.
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Faruk Fatih Özer was found dead in his prison cell on Nov. 1. The former CEO of now-defunct crypto exchange Thodex was serving an 11,000-year sentence for running one of the largest crypto scams in history.
His death marks the latest turn in the Thodex saga, with ripple effects so significant they altered Turkish cryptocurrency laws.
The initial details of Özer’s death point to suicide, but the investigation is still ongoing. It has once more brought Thodex back into the spotlight.
Here’s a look back at Özer’s story, how the crypto exchange impacted Turkish law and how it may have contributed to the country’s increased crypto adoption.
$2-billion Thodex scam sees raids, arrest and CEO out on the lam
On April 21, 2021, Thodex cryptocurrency exchange suddenly shut down trading and withdrawals. The initial announcement read that this could continue for four to five days. As Cointelegraph Turkey reported at the time, the exchange claimed that this was to improve its operations with the help of “world-renowned banks and funding companies.”
But local media reported that Özer had fled to Thailand with over $2 billion in funds as part of an exit scam. There were also reports that police had raided the exchange’s offices in Istanbul.
Istanbul’s chief prosecutor’s office corroborated the reports the following day. It announced a probe into Thodex and said police had arrested 62 people allegedly involved in the scam. Özer denied the accusations, claiming his trip abroad was to meet foreign investors.
As of April 30, 2021, a Turkish court decided to jail six suspects, including family members of the missing CEO and senior company employees, pending trial. Interpol also issued a red notice for Özer.
“When he is caught with the red notice, we have extradition agreements with a large part of these countries. God willing he will be caught and he will be returned,” said Interior Minister Süleyman Soylu.
Özer managed to evade capture for over a year. Albanian authorities eventually detained him on Aug. 30, 2022. He attempted to appeal extradition in court, but the decision was upheld, and Özer was in Turkish custody by April 30, 2023, two years after the scandal began.
The case against Özer was swift. In July 2023, just three months after arriving in Turkey, he was sentenced to seven months and 15 days in prison for failing to submit certain documents requested by the Tax Inspection Board during the trial.
On Sept. 8, 2023, the Anatolian 9th High Criminal Court sentenced Özer, along with two of his siblings, to 11,196 years, 10 months and 15 days in prison, along with a $5-million fine.
In court, Özer claimed that he and his family were facing false accusations. He said, “I am smart enough to manage all institutions in the world. This is evident from the company I founded at the age of 22. If I were to establish a criminal organization, I would not act so amateurishly. … It is clear that the suspects in the file have been victims for more than 2 years.”
Related: Turkey to empower watchdog to freeze crypto accounts in AML crackdown: Report
Özer was serving his sentence at the Tekirdağ No. 1 F-Type High Security Closed Penal Institution when he died. F-Type prisons are high-security institutions reserved for political prisoners, members of organized crime syndicates and other armed groups serving an aggravated life sentence.
Human rights advocates have repeatedly raised concerns about the conditions at F-Type prisons. In 2007, Amnesty International noted “harsh and arbitrary” disciplinary treatments, as well as isolation.
Turkey changes its laws to protect investors
The Thomex scandal and its ensuing fallout were so significant that they drove the Turkish government to change its policies toward cryptocurrencies.
Immediately following news of Özer fleeing the country, the Central Bank of the Republic of Turkey banned crypto payments and prohibited payment providers from offering fiat on-ramps for crypto exchanges. The official notice outlawed “any direct or indirect usage of crypto assets in payment services and electronic money issuance.” Notably, the ban excluded banks, meaning that users can still deposit lira onto crypto exchange accounts using bank transfers.
The ban aimed to ensure financial stability, while other agencies like the Capital Markets Board (CMB) and the Financial Crimes Investigation Board (MASAK) moved to legitimize trading activities. In May 2021, MASAK amended money laundering and terrorism financing laws to include provisions for cryptocurrency.
By 2024, the “Law on Amendments to the Capital Markets Law” came into effect. This built on the initial changes in 2021, which included extensive consumer protection measures in addition to provisions on licensing and reporting.
These new measures, which also aimed to move Turkey off the Financial Action Task Force’s “gray list” of countries with inadequate Anti-Money Laundering measures, have in turn helped spur the local crypto industry.
Chainalysis’ “2025 Geography of Crypto Report” found that Turkey led the Middle East and North Africa in value received in crypto. Trading activity also spiked last year.
In the long term, the Thodex scandal may have led to increased crypto adoption in the country, but only after it rocked the Turkish crypto industry and left many investors out to dry. It also resulted in the imprisonment and death of its orchestrator and CEO.
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