The Central Bank of Sri Lanka (CBSL) is considering criminal action against the group behind the crypto investment scheme known as Sports Chain, which was exposed as a scam by Al Jazeera seven months ago. The CBSL has declared that the investment venture was run as a pyramid scheme, which is illegal under Sri Lanka’s Banking Act. The bank has sought advice from the attorney general on pressing criminal charges against those responsible. Running pyramid schemes in Sri Lanka can result in imprisonment between three to five years, and offenders must pay a fine of LKR2m ($6,222) or twice the amount received from participants in the scheme, whichever is higher.
Al Jazeera revealed last August that thousands of Sri Lankans, including doctors, politicians and security personnel, had fallen prey to the fake crypto scheme. Some gave up their jobs in the hope of high returns while many pawned their jewellery, mortgaged their property and sold their vehicles to invest all they could in the cryptocurrency introduced to them as Sports Chain. Despite being promised a five-time higher return, they had barely received what they had invested and many did not even get that.
The Financial Crimes Investigation Division (FCID) began investigations less than a month after Al Jazeera’s revelations and has since charged nine suspects for money laundering. If found guilty under the Money Laundering Act, the suspects will be liable to pay the state a fine of up to three times the value of the defrauded property. They can also face between five and 20 years of jail time.
However, for investors to retrieve their money, Sri Lanka’s central bank will have to charge the suspects under the Banking Act for running a pyramid scheme. Lawyers appearing for the accused maintain their clients cannot be charged for money laundering. During hearings at the Colombo Chief Magistrate’s Court late last month, attended by Al Jazeera, the FCID said it was continuing investigations into the suspects.
The FCID has made damning revelations on how the suspects invested some of the money they received from their victims in expensive vehicles and two to four-bedroomed luxury condos at a housing complex in the capital Colombo. The main suspect, Shamal Bandara, had told investigators his only assets were a house in the northwestern town of Kurunegala and an old vehicle. However, the FCID found that Bandara had been using a jeep bought under his mother’s name.
Investors say they are desperate to get back their money in the face of the economic crisis in Sri Lanka, which has seen inflation of about 54% in February 2023. One investor, Harshana Pathirana, who had invested LKR2.2m ($6,844), said he was looking to migrate to find a job and rebuild his finances. Another investor, Priyanga Kasturiarachchi, had deposited almost his entire savings of LKR1.8m ($5,600), that he earned as a tourist guide for more than a decade and had managed to withdraw LKR1.3m ($4,044).
“We will be happy if they are sent to jail. But it’s also important for us to get our money back,” Kasturiarachchi told Al Jazeera. “We will have to wait and see what happens when the CBSL files charges against them. At the end of the day, we need our money back”. The Colombo Chief Magistrate’s court will take up the case filed by the FCID for hearing again in August.