12 Years in Prison for Crypto Trading in Bangladesh? What Really Happens

It’s a story that keeps popping up: someone in Bangladesh gets sentenced to 12 years in prison for trading Bitcoin. You see it in headlines, share it on social media, and assume it’s true. But here’s the truth - no one has actually been sent to jail for 12 years just for buying or selling crypto in Bangladesh. Not one case. Not even close.

Where Did the 12-Year Sentence Come From?

The number 12 years didn’t come from a new law. It came from a press statement. Back in 2014, Bangladesh Bank - the country’s central bank - issued a warning. They said Bitcoin wasn’t legal tender. That any transaction using it could be illegal. And then, in an off-the-record comment to reporters, a bank official said violators could face up to 12 years in prison.

That number stuck. Media outlets ran with it. International headlines screamed: “Bangladesh Bans Bitcoin - 12 Years Jail!” But here’s what no one told you: that 12-year figure was never written into law. It was an extrapolation. A guess. A worst-case scenario pulled from existing anti-money laundering rules.

The actual law they were referencing is the Money Laundering Prevention Act 2012. Under Section 9(1), the maximum sentence for money laundering is 10 years - not 12. The bank added the extra two years in their public messaging, possibly to scare people off. It worked. The fear spread. But the law didn’t change.

What Laws Actually Apply?

Bangladesh doesn’t have a law that says “crypto is illegal.” Instead, it uses old laws to cover new behavior. Three main laws are used to target crypto transactions:

• Foreign Exchange Regulation Act 1947: This law says only authorized banks can handle foreign currency. Sending money overseas to buy Bitcoin? That’s technically a violation.
• Money Laundering Prevention Act 2012: If crypto is used to hide illegal money - like drug cash or stolen funds - then you’re breaking this law. But so is using dollars or taka to do the same thing.
• Anti-Terrorism Act 2009: Added to the warning list in 2017. The idea is that crypto could fund terrorism. But again, this only applies if it’s used for that purpose.

Legal experts at Mahbub & Company explained it simply: “It’s not the Bitcoin that’s illegal. It’s using it to break the law.” If you use cash to buy drugs, you go to jail. If you use Bitcoin to buy drugs? Same punishment. The tool doesn’t change the crime.

Is Crypto Actually Banned?

No. Not officially.

Bangladesh Bank’s notices are called “cautionary warnings.” They’re not regulations. They’re not laws. They’re advice - with teeth. Banks are told to block crypto-related transactions. Payment processors are told to cut off crypto platforms. But there’s no statute that says, “Possessing Bitcoin is a crime.”

And yet, people are afraid. Why? Because the government doesn’t need to write a new law to make crypto risky. It just needs to make it impossible to use banks, exchanges, or payment apps. That’s exactly what happened. Banks now freeze accounts linked to Binance, Paxful, or local P2P traders. Withdrawals get blocked. Transfers get flagged.

The result? A thriving underground market. Chainalysis reported a 206% jump in crypto transactions in Bangladesh between mid-2021 and mid-2022. Even with all the warnings, over 2.1 million people owned crypto by the end of 2024. Most of them? Using P2P apps like LocalBitcoins or Binance P2P, paying in cash or mobile money.

Has Anyone Actually Gone to Jail for 12 Years?

No.

Not a single person. Not even close.

According to Bangladesh’s Anti-Money Laundering Department, only 37 digital financial crime cases were filed nationwide in 2022. None involved crypto trading as the primary charge. In 2024, the Cyber Security Division logged 17 crypto-related cases. Most were about fraud - people getting scammed, not people trading Bitcoin. And none resulted in sentences near 12 years.

What happened instead? Fines. Account freezes. A few short jail terms - maybe 6 months to 2 years - for people caught moving large sums illegally. But nothing that matches the 12-year myth.

Why the gap? Because enforcing a 12-year sentence for personal crypto trading would be a disaster. Imagine arresting every student who bought $50 worth of Ethereum. Every shopkeeper who used crypto to pay a supplier. Every migrant worker sending money home through P2P. The system would collapse.

Why Does the Myth Still Exist?

Because fear sells. International media loves dramatic headlines. “Bangladesh Jails Crypto Traders for 12 Years!” sounds way more clickable than “Bangladesh Bank Warns Against Crypto Use Under Existing Financial Laws.”

Local rumors amplify it too. If someone gets arrested for wire fraud and is also found to have traded crypto, the news says: “Man jailed for crypto.” The crypto part gets the spotlight. The real crime - fraud, embezzlement, tax evasion - gets buried.

And then there’s the confusion from conflicting advice. Some blogs claim “owning Bitcoin is illegal in Bangladesh but legal offshore.” Others say “trading with a crypto broker is legal.” Neither is true. There’s no legal gray zone - just a legal minefield.

What’s the Real Risk?

The real risk isn’t prison. It’s losing your money.

If you send taka to a P2P seller and they disappear? The bank won’t help. If your account gets frozen because you traded crypto? You might lose access to your salary, your rent payments, your family’s savings. If the police investigate you? Even if you’re innocent, you’ll spend months clearing your name.

And if you’re caught moving large sums? You could face charges under the Foreign Exchange Regulation Act. That’s a 2-year sentence for a first offense. Up to 5 years if you do it again. That’s real. That’s possible. That’s the actual penalty.

But 12 years? That’s a ghost story. Used to scare people into compliance.

What About the Blockchain Strategy?

Here’s the twist: while Bangladesh Bank warns against crypto, the government is quietly building a national blockchain strategy. Published in 2020, it explores using blockchain for land records, supply chains, and public services. It doesn’t mention Bitcoin. It doesn’t mention Ethereum. But it clearly sees value in the underlying tech.

This contradiction tells you everything. The government doesn’t hate technology. It hates uncontrolled money. It hates bypassing the banking system. It hates losing oversight.

So they block crypto not because it’s evil - but because it’s unpredictable.

What Should You Do If You’re in Bangladesh?

If you’re a resident:

• Don’t use banks or digital wallets to buy or sell crypto. That’s how you get flagged.
• Don’t assume P2P trading is safe. Cash deals carry risk - both from scams and from legal exposure.
• Don’t think you’re immune because “everyone’s doing it.” Enforcement might be rare, but it’s not zero.
• If you’re trading, keep records. Know your counterparty. Avoid large, frequent transfers.

If you’re outside Bangladesh - say, in New Zealand or the U.S. - and you’re sending money to someone there? Don’t. Even if you think you’re helping, you could be enabling a violation of their financial laws. And that could put them at risk.

What’s Next?

Bangladesh isn’t alone. China banned crypto. India taxed it. Vietnam cracked down. Each country is figuring out how to handle decentralized money.

Bangladesh’s path? Probably more restrictions. More bank controls. More warnings. Maybe someday, a law will be passed - one that actually defines crypto, not just punishes it. But that’s years away.

For now, the 12-year sentence is a warning sign - not a sentence. A deterrent - not a reality. And if you’re thinking about trading crypto in Bangladesh? You’re not breaking a law. You’re playing Russian roulette with your bank account.

The real question isn’t whether you’ll go to jail. It’s whether you’ll lose everything trying to make a profit.