The Central Bank of Sri Lanka is preparing to sue a group suspected of organising a $47 million cryptocurrency Ponzi scheme, according to Al Jazeera.
According to the Financial Crimes Investigation Division (FCID), the alleged Ponzi scheme was created by a group of nine people.
They promoted a crypto project called Sports Chain and an associated token that never actually existed.
Sri Lankan authorities took note of the suspicious activity after last year’s Al Jazeera investigation.
“They siphoned off about 15 billion rupees (~$46.6 million) from more than 8,000 Sri Lankan residents,” the claim states.
Some of the suspects were detained in 2022, but in December they were released on bail.
The FCID asserts that the fraudsters allegedly invested part of the funds received from their victims in expensive cars and luxurious apartments in Colombo, the capital of Sri Lanka.
Shamal Bandara, named the principal suspect, told investigators that he has only a house in Kurunegala and an old car. However, law enforcement found that he drove a jeep purchased in his mother’s name.
Additionally, a Mercedes-Benz registered in Bandara’s brother’s name was used by Zhang Kai and Wang Yixiao — two Chinese nationals who are also defendants in the case.
“The suspects allegedly sought to link themselves to a fraudulent company to create the impression that they had accumulated their assets legally,” according to the FCID report.
Defense lawyers for the accused fully deny their clients’ involvement.
Some investors interviewed by Al Jazeera journalists said they mortgaged their cars and apartments to invest in the project.
Under Sri Lankan law, organising a financial pyramid scheme can carry a sentence of five to 20 years in prison, as well as a fine equal to three times the amount stolen.
Over the past year, the country’s economy has weakened noticeably, prompting citizens to show keen interest in digital assets. In March 2023, Sri Lanka’s inflation reached 50.3%.
SEC Earlier this month, the U.S. Securities and Exchange Commission secured a favorable verdict in the case against the organizers of the Ormenus Coin scam. The defendants will pay $102 million in penalties.