Turkish Crypto Scam Follow-Up

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I wanted to follow up on the apparent Turkish cryptocurrency scams that recently occurred in Turkey. I did a lot of reading about cryptocurrencies as well as available ways of investing in them after I published my previous articles about the alleged crypto scams. You can read my first article here and my second article here in case you missed them.

Follow-Up Details

The most recent article I've come across concerning these two alleged crypto scams in Turkey is with the Daily Sabah. The article mentioned that several dozen people have been arrested related to the Thodex Crypto Exchange. The search is still ongoing for Thodex's CEO who departed Turkey supposedly to Albania or Thailand. There is an international arrest warrant for him.

The Daily Sabah article continues with some arrest details related to Turkey's second alleged crypto scam at the Vebitcoin Cryptocurrency Exchange.

Turkish investors seem especially susceptible to investing scams that offer a way to hold something of value that will maintain buying power. This is because Turkey suffers from chronic inflation which erodes the average Turk's purchasing power if their money is held in Turkish currency.

Although I expressed my concerns around cryptocurrency investing in my two previous related articles, I want to make something clear. If proof comes out that Turkish cryptocurrency investors were indeed scammed, the problem in these cases is with the two exchanges and perhaps inadequate government oversight, not with the actual cryptocurrencies.

Reminder to Remember This Lesson

I just want to repeat my previous cautionary note. Be cautious about investing in cryptocurrencies. And remember the lesson I mentioned in my earlier article about Thodex's shutdown. The lesson, "Don't put all your eggs in one basket" must be remembered!

I personally wouldn't invest in cryptocurrencies, but if I did decide to invest in a cryptocurrency, I would only invest a small portion of my overall portfolio. And by all means, thoroughly investigate the exchange that will host your cryptocurrency holdings.

Additionally, consider spreading your investments over multiple exchanges, not just one. This is another to reduce your risk.

Investors should almost always diversify as part of their asset allocation strategy. Diversification is known as the only "free lunch" when it comes to asset allocation and investing. The free lunch is because diversifying among different assets and asset classes will usually reduce portfolio risk and volatility.

An Old Friend

I had a very interesting and timely visit with a long time friend of mine recently. Let's call him Doug. I visited Doug just after news of the possible Thodex scam came out. As my old friend Doug and I were catching up, I learned that he invests in cryptocurrencies. He is very knowledgeable in cryptos and has a fair amount of money invested in them.

Doug explained the development history of many better known cryptocurrencies and he provided me with a lot of detail on the intended uses of each of them. He helped me understand that cryptocurrencies offer much more than an intended method of storing value. They will also offer utility in many areas of the US and international finance, industry, and trade.

Needless to say, I came away from my visit with a different point of view!

My Cryptocurrency Thoughts Now

I can summarize my newfound thinking about cryptocurrencies in a  few sentences. My friend Doug took me from being very skeptical to being reasonably open minded about cryptocurrencies. I've long known that anything in this world is only worth what someone will pay for it. And if lots of people want something of limited quantity, it will have value. Some people are indeed paying for cryptocurrencies, so they have some value that can't be denied.

Take a look at the price trajectory of Bitcoin. Like it or not, the appreciating value of Bitcoin is hard to ignore.

Concerning cryptocurrencies, there are more people dipping their toes in the cryptocurrency markets everyday. I saw one statistic that stated 14% of Americans own some amount of cryptocurrency. So there is at least some potential for decent investment returns if the planned utility of cryptocurrencies comes to fruition.

I've decided to study cryptocurrency markets this summer and look at how my trend following systems might perform with them. There is little price history to work with, but I will work with what's available and see where it leads me.

I'll follow up with you after I complete my cryptocurrency studies.

Thanks for reading!

Mike Bishop

Editor, The FIRE Letter

Disclosure: I do not own any crypto currency, either directly or indirectly through a fund or ETF.

Disclaimer: All strategies including recommended trades published here are for educational and informational purposes only. They are not recommended for any specific individual, business, or other legal entity. I don’t know your age, income, personal or financial circumstances and cannot possibly suggest any financial or investing decisions for you. Seek advice from your accountant, financial advisor, and attorney before making any investing decisions. Always conduct your own due diligence before making any investing decisions.