Millions Lost in Sri Lanka’s Biggest Financial Fraud as MTFE Platform Collapses
Thousands of Sri Lankans have suffered devastating financial losses as the Metaverse Foreign Exchange (MTFE) Group’s platform collapsed, leading to what is being called the largest financial fraud in recent times. Following a court hearing, the Colombo Chief Magistrate’s Court imposed a foreign travel ban on five key individuals from the trading platform MTFE Sri Lanka Group, but one of them managed to flee to Dubai, UAE.
The Financial and Commercial Crimes Investigation Division (FCCID) shared shocking details of the pyramid scheme orchestrated by MTFE through an AI-powered trading platform. This platform offered trading opportunities in forex, commodities, stocks, and cryptocurrencies. It has been revealed that MTFE defrauded both local and foreign depositors’ money, totaling a staggering US$1 billion (Rs.325 billion). What’s more, the virtual currency trading entity was not even registered with the Central Bank.
In response to this alarming situation, the Central Bank’s Resolution and Enforcement Department has launched a thorough investigation into MTFE Sri Lanka Group. It is believed that the operations of this trading platform fall under the illegal pyramid schemes system, which is strictly prohibited in Sri Lanka.
MTFE Sri Lanka’s online presence is minimal, with only a basic Facebook page and a WhatsApp group. However, the group has falsely claimed to be associated with Canada’s Ontario-based MTFE Group, further bolstering its fraudulent activities. The scam spread rapidly across the country, targeting and attracting thousands of financially vulnerable individuals, particularly rural youth, who were enticed by the promise of quick and lucrative returns.
Prospective victims were invited to join chat groups via WhatsApp, where they were encouraged to make deposits with the trading platform, promising generous profits in return. Despite its registration with the Department of the Registrar of Companies, MTFE had not submitted any operational details.
The collapse of the MTFE platform came suddenly, as depositors woke up one morning to discover that their account balances had plummeted into negative figures. Prior to this, they had faced difficulties withdrawing funds for several weeks, with substantial and questionable losses appearing in their virtual trading accounts on a Thursday night. By Friday, the app displayed a negative account balance for all depositors, leaving them in dire financial straits overnight.
The platform operated outside of any legal transaction channels, with the whereabouts of its management team remaining unknown. In retrospect, it is evident that MTFE employed a classic Ponzi scheme, relying on new deposits to pay off previous investors before inevitably collapsing. Authorities believe that by exercising caution and avoiding falling into this trap, individuals could have protected themselves from this devastating financial fraud.
In the wake of this incident, the Sri Lankan government and regulatory bodies must strengthen their efforts to protect the public from fraudulent schemes. There is a pressing need for increased vigilance, especially in the booming fintech sector, where technological advancements may attract more unsuspecting victims. While it is undoubtedly a challenging task, swift action and improved oversight can minimize the likelihood of such large-scale frauds occurring in the future.
This incident serves as a harsh reminder for individuals to remain cautious when presented with investment opportunities that offer unrealistically high returns. Conducting thorough due diligence and seeking advice from reputable financial experts can help prevent falling victim to such scams. In the aftermath of this disastrous event, it is crucial that victims receive adequate support and that measures are put in place to prevent similar frauds from taking place in the future.
