Crypto assets, which have gained a place in daily life with the developing technology, have been frequently invested recently. Developments also bring different crimes with them. It is encountered that the existing fraud crime is committed through crypto assets. In this sense, since the subject of the fraud crime that can be carried out through information systems is crypto assets, it is necessary to evaluate it separately as “crypto asset fraud”. First of all, it is necessary to obtain information about the crime of fraud and crypto assets.
Fraud Crime
The crime of fraud is regulated under Articles 157 and 158 of the Turkish Penal Code (“TPC”). The basic form of the offense is that a person deceives another person and causes damage and benefits himself/herself or another person. The crime of fraud requires three elements: fraudulent behavior, intent to deceive and intent to benefit.
For the crime of fraud to occur, the purpose of providing benefit is in question for assets that have financial value. (1) Therefore, as a result of the increasing use of crypto assets due to reasons such as easy transaction interfaces, inflation, interest in technology, the crime of fraud is also committed through crypto assets.
Crypto Assets
Cryptocurrencies, which are a sub-section of virtual currencies, are assets represented as a token with blockchain technology in the digital environment corresponding to a value in real life. Blockchain technology enables the secure transmission, transfer and trading of tokens.
Unlike currencies, they are decentralized. Being decentralized means that they are referred to as “assets” as opposed to “money” issued by a center.
The element of the crime of fraud, aiming to benefit for another person or for oneself, is also committed through crypto-assets since they correspond to financial assets. In order for the crime of fraud to be committed by targeting crypto assets, it is possible only if it is carried out in a completely digital environment. Therefore, the realization of the crime of fraud through crypto assets will be discussed separately below.
Crypto Asset Fraud
The value of crypto assets can be measured in money. Therefore, crypto assets are considered as assets. If the elements of the crime of fraud are completed, the element of providing benefit must target crypto assets. In other words, crypto assets must be defrauded. However, if the elements of the crime of fraud are completed, a crime will be mentioned.
Encryption techniques are used in the circulation and transactions of crypto assets, which ensure that only certain persons can decipher these transactions. The crime of cryptocurrency fraud is committed by using information systems. The crime of fraud is committed over the Internet or through cryptocurrency exchanges, and the use of information systems is required to carry out the fraudulent act.
In the commission of the crime through information systems, the crime of fraud has moved from the basic form of the crime of fraud and gained a qualified state included among the qualified elements within the scope of Article 158 / f of the TPC.
Crypto asset fraud can be carried out with different methods from information systems. In this sense, it is necessary to include the methods of cryptoasset fraud separately for a more detailed and concrete examination. The methods given below do not cover all methods in cryptoasset fraud, and the methods given are not specific to cryptoasset fraud.
Crypto Asset Fraud Methods
(i) Phishing-Smishing-Vishing
This method, which hijacks users’ data by redirecting to fake sites, is a frequently encountered method in practice. Users who are redirected to the fake site are harmed by capturing their name and password.
Users enter their usernames and passwords to the site that they are unaware that it is fake. However, the fraudster enters this information on the real site and accesses crypto assets from the system. This method is encountered by the fraudster in single-degree verification systems or crypto exchange platforms that only log in with a password.
(ii) Ponzi Scheme (Ponzi Scheme)
This method, which first came to the agenda in the 1920s with the name “Ponzi Scheme”, is a fraud method that is completed when the system founders collect investors through an unproductive system and leave the system after providing access to high profit margins in one go.
Founders who develop communication strategies aim to ensure trust in the system and advertisements are an important tool in these systems.
(iii) Deceptive Coin Sale Method
Deceptive coins, which are designed to defraud, are realized through financial manipulation by selling coins that have rapidly increased in value in the market at high prices. Unlike other fraud methods, financial manipulation of the market is carried out on crypto asset exchanges. According to the Capital Markets Law No. 6362 (“CMB”), such manipulation is regulated as a crime under the first and second paragraphs of Article 107 as manipulation of capital market instruments.
Deceptive coin sales and subsequent manipulation on crypto asset exchanges are considered within the scope of qualified fraud since they are carried out through information systems.
(iv) Hidden Crypto Asset Mining (Cryptojacking)
It is unauthorized crypto asset mining without revealing itself on devices by logging into the website such as computers. It is done by installing the crypto mining code on the device as a result of clicking on the e-mail received on the person’s device. However, for this, it is necessary to enter the system with malicious software, then it operates to create crypto assets secretly.
Legal Evaluation of Crypto Asset Fraud Methods
By defrauding crypto assets, people are subjected to material and moral damage. On the one hand, crypto fraud, which provides unfair benefit for the fraudster, creates criminal liability. The crime of defrauding crypto assets can be carried out by the methods described above. In order to commit this crime, it constitutes the crime of entering the information system regulated in the TPC (TPC 243/1) and the crime of preventing access to data in the system, disrupting, deleting and destroying data (TPC 244/2). (2)
The crime of crypto asset fraud must be committed with information systems due to its nature. Crypto asset fraud, which is evaluated within the scope of the crime of fraud regulated in Article 157 of the TPC, is in question by deceiving a person with fraudulent behavior and causing damage and providing benefit to himself or someone else. (3)
Article 158 of the TPC regulates the qualified forms of the crime of fraud. Since crypto asset fraud can be easily realized through information systems, it constitutes the qualified form of the crime of fraud according to Article 158/1 (f) of the TPC. Because committing the qualified fraud crime through information systems facilitates the crime of fraud.
In addition to these, in deceptive crypto asset sales and Ponzi scheme methods, the crime of qualified fraud will occur within the scope of Article 158/1 (g) of the TPC, as it is included in the exploitation of the convenience provided by the press and media organs.
The crime of crypto fraud should be evaluated separately in each concrete case, and the qualified form of the crime of fraud should be determined accordingly.
Legal Intern Meryem Torkay
Bibliography
- Criminal General Assembly of the Court of Cassation, decision numbered 2017/15-1061 E., 2019/426 K. and dated 14.05.2019.
- Sarıkaya, Samet. Samet Sarıkaya, Anadolu University Publications, July 2023, pp.573-592.
- Sağır, Albayrak. Misuse of Data Mining in Cyber Crimes. December 2024.
