Sri Lanka Court Tells Central Bank to Stop $1M Crypto Scam – Here’s What Happens Next!

by

Sri Lanka Court Moves After $1M Fraud Routed via <a href="https://pricpr.com/bnb-usd/">Binance</a>

Key Highlights

  • A Rs 290 million ($1M) bank fraud case allegedly routed stolen funds through Binance crypto accounts.
  • The court ordered the Central Bank of Sri Lanka to stop capital outflows exploiting crypto loopholes.
  • Authorities were told to speed up investigations and launch public awareness campaigns on crypto fraud.

A Colombo court magistrate, Asanga S. Bodaragama, has issued a strong warning about the growing risk of financial crimes involving cryptocurrencies in Sri Lanka.

On March 12th, a judge instructed Sri Lanka’s central bank to quickly act to stop money from leaving the country illegally using cryptocurrency, taking advantage of loopholes in the current foreign exchange laws.

The judge issued the order during a court hearing about the suspected theft of approximately $1 million from a prominent bank. The people involved are accused of illegally taking money from depositors and then using Binance accounts to move the funds through cryptocurrency transactions.

Sri Lanka’s courts have raised concerns about the lack of clear rules for cryptocurrency before, but a recent statement from a magistrate was particularly strong.

“This is Not Ordinary Theft”

Magistrate Bodaragama emphasized that this case is more serious than typical bank fraud. He’d already informed the court that it needed to be addressed quickly and couldn’t be treated as a regular financial crime.

The judge has observed a rise in fraud cases involving cryptocurrency. However, investigations seem to focus mainly on prosecuting these cases in court, with little effort being made to prevent them from happening in the first place.

He ordered the Criminal Investigation Department (CID) to finish their investigation into the missing 290 million rupees promptly, and to avoid delaying the process by repeatedly bringing in suspects without making significant headway.

The judge ordered the Criminal Investigation Department and the Central Bank to create a public education campaign about the dangers and illegality of cryptocurrency transactions that aren’t officially approved. The court noted that many Sri Lankans don’t fully understand the new types of financial crimes happening with cryptocurrency, especially those not authorized by the Central Bank.

A Regulatory Vacuum Under Pressure

Sri Lanka doesn’t currently have specific laws regulating cryptocurrency. While the central bank has cautioned people about the risks of investing in digital currencies and banks can’t process crypto card payments, using or owning cryptocurrency isn’t illegal. Platforms like Binance are still available to Sri Lankans, allowing them to trade with each other directly.

The judge specifically pointed out this legal uncertainty, noting that people are taking advantage of loopholes in the currency law to commit fraud and move money illegally overseas. He urged the Central Bank to find and fix these weaknesses.

The announcement comes at a significant time. Just weeks prior, in February 2026, Sri Lanka’s government stated it was developing clear rules for digital assets like cryptocurrencies and stablecoins. This new framework is intended to protect citizens by filling a legal gap that currently exists.

A Pattern Across South Asia

Sri Lanka isn’t the only country facing financial fraud related to cryptocurrency. India is also seeing a rise in these types of cases. Recently, The Crypto Times reported that Indian authorities arrested the chief technology officer of Darwin Labs due to their involvement in a $720 million Ponzi scheme called GainBitcoin.

Starting January 1, 2026, India will require crypto-assets to be reported as part of its international tax compliance systems, FATCA and CRS. This means increased monitoring and reporting of these assets.

Sri Lanka is facing a particularly difficult situation. Still recovering from the economic crisis of 2022 and without any rules in place to oversee cryptocurrencies, the country needs to act quickly. A recent court order is pushing the Central Bank to do more than just issue warnings – they must take firm action to prevent another 290 million Rupees from being lost through Binance.

Read More

2026-03-13 09:41