The Central Bank of Sri Lanka (CBSL) is reportedly considering charging executives of a digital currency investment platform who allegedly violated provisions of the country’s Banking Act.
Sports Chain, an investment platform, was the subject of a seven-month investigation on suspicion of defrauding individuals. MDSN Gunatilleka, an official from the CBSL, told Al Jazeera that it found sufficient evidence to show that the firm was operating as a pyramid scheme.
The central bank disclosed that it is waiting for the green light from the country’s Attorney General before instituting legal proceedings against Sports Chain’s principal member. In Sri Lanka, operators of pyramid schemes face up to five years in prison and payment of additional fines of double the amount fleeced from victims.
An investigation revealed that Sports Chain attracted investments from thousands of Sri Lankan citizens in early 2022, driven by sky-high inflation and threats of a recession. Sports Chain capitalized on their fears to offer mouth-watering returns on investments, but it turned out to be a sham.
An Al Jazeera investigation drew attention to the syndicate’s operation, prompting the country’s Financial Crimes Investigation Division (FCID) to open its own probe into the activities of Sports Chain. However, the attorneys of the accused continue to profess their innocence, saying that the executives have no criminal liability in the debacle.
“Our clients were not the creators of this app. They had no control over it,” said Tivanka Ekaratne, legal representative for the accused. “This has not been proven as a pyramid scheme yet. It is the investors who have made such claims.”
The prosecutors have moved to seize funds and real estate linked to the accused persons to prevent them from disposing of the assets during the pendency of the case. Authorities confirm that one of the accused persons floated a sham company to launder funds, with the prosecution hinting toward adding money laundering charges.
Another scam syndicate bites the dust
As regulators become wary of the threat posed by digital currency scammers, there have been increasing reports of busts and legal actions against them. Law enforcement agents are not only going after the project founder but are now upping the ante against promoters.
In January, a Bitconnect promoter was ordered to pay $17 million as restitution to 800 victims, while New York regulators issued a cease and desist order against platforms offering unregistered securities to residents.
The U.S. Department of Justice (DOJ) scored a massive win following the conviction of Randall Crater, My Big Coin founder, for fleecing investors off $7.5 million. Crater was sentenced to eight years in prison for his role in the scam with prosecutors hoping that his conviction would serve as a deterrent to other bad actors.
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