Legal amendments to tackle cryptocurrency pyramid scams

The government is moving to introduce legal amendments to allow for more stringent action against those who operate pyramid schemes. 

The move follows complaints that pyramid schemes posing as cryptocurrency investment platforms are defrauding thousands of investors. 

Justice Minister Wijeyadasa Rajapakshe on Friday (4) chaired a fresh discussion with authorities on strengthening laws related to pyramid schemes. Officers from the Police Legal Division, the Ministry of Defence, Central Bank and the Attorney General’s Department were among those who took part. 

Minister Rajapakshe had earlier met with some of those who had allegedly been defrauded of their funds after being duped into investing in cryptocurrency pyramid scams. 

Pyramid schemes are illegal under provisions of the Banking Act No. 30 of 1988. Nevertheless, such scams continue to operate in the country and the growing popularity of digital currencies has enabled scammers to lure people into investing in bogus cryptocurrency platforms that are nothing more than a new pyramid scheme variant. 

As the government mulls fresh laws to curb pyramid schemes, the Criminal Investigation Department (CID) on Thursday (3) arrested two further suspects connected to alleged cryptocurrency scam “Sports Chain,” bringing the total number of arrests linked to the probe to eight. They were remanded till November 10 after being produced before the Colombo Chief Magistrate’s Court. Two Chinese nationals and six Sri Lankans have been arrested over the alleged scam thus far. Seven, including the Chinese couple are currently in remand custody while one Sri Lankan suspect is out on bail. 

Sources said those under arrest are part of a core team linked to Sports Chain, with the local suspects acting as the main promoters of the platform, working to recruit investors from across the country. 

The CID’s Financial and Commercial Crime Investigation Division is conducting investigations into Sports Chain, which police claim may have defrauded up to Rs. 14 billion from as many as 8000 investors over a two year span.