Why CBEX Will Happen Again in Nigeria, If Stakeholders Don't Do Things Differently

by Edison Irabor

The recent collapse of the latest Ponzi scheme in Nigeria, Crypto Bridge Exchange or CBEX, has left many Nigerians devastated, with losses estimated in hundreds of millions of naira. The promoters of the Ponzi scheme reportedly operated under the legal entity ST Technologies International Ltd, Smart Treasure/Super Technology. As eventually confirmed by Nigeria’s Securities and Exchange Commission (SEC) in its public statement of 17 April 2025, neither CBEX nor its affiliates were registered with the SEC to operate a digital asset exchange, solicit investments from the public, or involve in any activity within the Nigerian capital market. Investigations are also ongoing, with the Economic and Financial Crimes Commission (EFCC) issuing two Wanted Lists of Nigerian suspects and Kenyan suspects, so far, alleged to have perpetrated the CBEX Ponzi scheme.

Unfortunately, CBEX is not an isolated incident in Nigeria. Ponzi schemes have been a recurring problem in Nigeria’s financial landscape, and CBEX is just the latest example. And similar to the usual “medicine-after-death” warnings by relevant agencies, regulatory actions almost always come after the fact. Unless stakeholders, including investors, legitimate operators, regulators, and the members of the public, change their approach, CBEX will likely happen again.

Thankfully, the new Investments and Securities Act 2025 provides the SEC with more authority and powers to effectively curb Ponzi schemes and regulate Nigeria’s digital investments landscape, including digital assets. This legislative development is commendable. However, legislation will not be enough. It is only a foundation. To effectively curb Ponzi schemes—particularly in terms of nipping it in the bud—all stakeholders, including regulators, operators, law enforcement agencies, investors, and the members of the public must collaborate.

In this special periscope, we highlight some major Ponzi schemes in Nigeria, why Ponzi schemes remain a plague in the country, where industry bodies can help, and how regulators and other relevant agencies can be more proactive towards stemming the tide. Industry stakeholders also shared their insightful views with CAB.

Highlight of Some Major Ponzi schemes in Nigeria

MMM: A notorious Ponzi scheme that crashed in 2016, with the Nigerian Deposit Insurance Corporation estimating losses of around ₦18 billion. MMM promised returns of 30% to 100% in 30 days.
MBA Forex: A Ponzi scheme that operated from 2018 to 2020, defrauding people of ₦213 billion. It promised monthly returns of 15% or more and allowed investors to withdraw funds at any time.
Bitclub Advantage, Million Money: They are Ponzi schemes that emerged in 2018, targeting Nigerians with promises of high returns through cryptocurrency investments or charity networks. While Bitclub Advantage disguised itself as a cryptocurrency-based investment platform and promised unusually high returns that eventually collapsed, Million Money also promised high returns, typically within 30 days.
Inksnation: A crypto-related Ponzi scheme which claimed to have developed a philanthropic blockchain platform that could eradicate poverty in under 9 months and offered a cryptocurrency called Pinkoin. Inksnation promised unrealistic returns for buyers and holders of Pinkoin. Inksnation was founded by Omotade-Sparks Amos Sewanu, who was eventually arrested by the Economic and Financial Crimes Commission (EFCC) in May 2021 for alleged cryptocurrency fraud worth ₦32 million ($82,000).

It’s essential to note that investing in such schemes can lead to significant financial losses, and regulatory bodies like the Securities and Exchange Commission (SEC) have warned Nigerians to conduct due diligence on investment platforms before investing.

“Sadly, this cycle will continue. But the more we speak up, educate, and raise awareness, the more we can protect future victims”, said Rume Ophi, leading crypto analyst and founder of Cryptopreacher Academy, when he spoke with CAB about Ponzi schemes in Nigeria and why they continue to enjoy patronage from Nigerians.

Why Ponzi Schemes Continue to Enjoy High Patronage in Nigeria

Despite the risks, Ponzi schemes like CBEX continue to highly attract investors due to several factors:

Promise of high returns: Ponzi schemes often promise unusually high returns, which can be tempting to investors seeking quick profits.
Lack of financial literacy: Many Nigerians lack a deep understanding of financial markets and instruments, making them vulnerable to scams.
Social proof: Investors may be influenced by friends, family, or social media endorsements, rather than conducting thorough research.
Dwindling trust in traditional financial institutions: Some Nigerians may turn to alternative investment schemes due to mistrust of traditional financial institutions or a desire for more control over their investments.

Ophi remarked that “it’s unfortunate that many Nigerians still see Ponzi schemes as ‘first come, first served’ opportunities. Some even say, Just join early and you’ll cash out, completely ignoring the reality: Ponzi schemes can collapse at any time—without warning.”

The recent CBEX incident highlights significant concerns about the effectiveness of current regulatory approaches. This incident underscores the need for regulatory bodies, such as the Securities and Exchange Commission (SEC), to adopt a more proactive stance in overseeing digital financial platforms.

Why CBEX and Other Ponzi Schemes May Continue to Thrive

The current regulatory approach may inadvertently enable Ponzi schemes to thrive. How is this possible?

Reactive rather than proactive approach: Regulators often respond to Ponzi schemes after they have already caused harm, rather than taking proactive measures to prevent them.
Insufficient public education: Regulators could do more to educate the public about the risks of Ponzi schemes and how to identify them.
Limited enforcement: Regulators may not have adequate resources, even when they may have the required authority, to effectively enforce regulations and shut down Ponzi schemes.
Complexity of cryptocurrency regulation: The rapidly evolving nature of cryptocurrency makes it challenging for regulators to keep pace and effectively oversee the industry.

Ophi identified greed as one of the feeding Ponzi schemes in the country. In his words, “A greedy person acts foolishly—and ends up humiliated by Ponzi schemes. It’s like a dead man who doesn’t know he’s dead.”

Reinforcing the vital need for Nigerians to have adequate financial knowledge, Ophi asserted that the rather high attraction Ponzi schemes have on Nigerians out there is due to lack of financial literacy: “The problem isn’t laziness—It’s a deep lack of financial knowledge. In our society, many people neglect the importance of learning—until disaster strikes.”

Preventing Ponzi Schemes

CBEX is one of the massive Ponzi schemes that, from time to time, plague the country. Unfortunately, such schemes are bound to happen repeatedly due to two major reasons:

(1) poor monitoring and enforcements by relevant agencies; and

(2) mass poverty, unenlightenment (due to inexistent investor education) and gullibility/illiteracy.

Investors and Members of the Public

Conduct thorough research: Investors should research investment opportunities thoroughly, looking for red flags such as unrealistic promises or unregistered operators.
Verify regulatory compliance: Investors should verify that investment opportunities are registered with relevant regulatory bodies.
Be wary of high-return investments: Investors should be wary of investments that promise unusually high returns, especially if they are not transparent about their business model.

Ophi emphasized the importance of knowledge in identifying Ponzi schemes and making informed investment decisions generally: “The truth remains: Knowledge is the ultimate protection—not promises from shady structures designed to steal your money. In our society, many people neglect the importance of learning—until disaster strikes.

Kunle Taiwo, a certified cryptocurrency investigator (CCI) with the Nigerian Police, also emphasized the critical role of education in stemming the prevalence of Ponzi schemes in the country. In his statement to CAB, Taiwo pointed out that “quality crypto education is the key; the only potent weapon to fight fraudulent actors.”

“If more people had simply asked Google, Is CBEX a scam?, many losses could have been avoided”, remarked Ophi, expressing his apparent frustration with the unsuspecting victims of the CBEX Ponzi scheme.

Ophi harped on the need for unsuspecting and uninformed members of the public to safeguard themselves by making some efforts to at least confirm the credibility of the so-called investment opportunities that are marketed to them.

Industry Associations and Groups

Notably, CBEX did not operate a virtual asset trading platform. Instead, it utilized cryptocurrency as a means to receive investments, while faking trading activity and withdrawals to deceive unsuspecting investors.

To prevent CBEX and other Ponzi schemes in the future, industry associations and groups should consider implementing certain measures:

Conduct Checks: Industry associations and groups could conduct preliminary checks on platforms that play or pretend to play in their space in order to ensure that these platforms are legitimate and compliant with regulatory requirements. In similar situations, the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN) had in the past conducted such checks on Inksnation (Pinkoin) and Zugacoin.
Provide Public Education: Industry associations and groups could educate the public about the risks of Ponzi schemes, how to identify them, and the importance of verifying regulatory compliance.
Promote Regulatory Compliance: Industry associations and groups could work closely with regulators to ensure members complied with relevant laws and regulations in the digital investments space in the country.
Establish Best Practices: Industry associations and groups could develop and promote best practices for investment platforms to prevent Ponzi schemes. For instance, SiBAN, in June 2022, introduced a Code of Conduct for Virtual Asset Service Providers (VASPs) in Nigeria in order to ensure that its members voluntarily adopted best practices towards improved transparency, efficiency, and market integrity, and transparency. Other industry associations and groups can borrow a leaf from such initiatives, and ensure full implementation.
Encourage Reporting: Industry associations and groups could encourage members and the public to report suspected Ponzi schemes to regulatory bodies like the SEC.
Collaborate with Regulators: Industry associations and groups could collaborate with regulators to identify and shut down Ponzi schemes proactively. In January 2021, the Blockchain Industry Coordinating Committee was founded as a follow-up action after a meeting with the SEC on the need to coordinate the blockchain industry to help prevent crypto-related Ponzi schemes and scams in the country.
Provide Training and Resources: Offering training and resources to members and the public on investment risks, regulatory compliance, and Ponzi scheme detection.
Promote Investor Awareness: Promoting investor awareness of the risks associated with Ponzi schemes and the importance of thorough research and due diligence.

Stephen Azubuike, Partner at Infusion Lawyers, in his statement to CAB on the role of industry associations in curbing Ponzi schemes and other illicit activities in the virtual asset sector in the country, emphasized the need for operators themselves to become more proactive, collaborative, and supportive of industry groups: “With the growing rate of virtual asset adoption in Nigeria, VASPs need to work together to police their industry. While the SEC and other relevant agencies have the primary responsibility to regulate the industry, as industry players themselves, VASPs are in a better position to help nip things in the bud.”

Azubuike, who is also the Vice Chair (Policy & Regulations) of the Steering Committee of the Virtual Asset Service Providers Association (VASPA), an Africa-focused VASP advocacy group, suggested collaboration between operators and regulators: “I see a need for synergy, infusing self-regulation with government regulation for a more efficient and effective consumer protection and investor safety in the emerging virtual assets industry.”

Regulators and Other Relevant Agencies

Investor education: Regulators should prioritize investor education about the risks of Ponzi schemes and how to identify them, as well as public education about cryptocurrencies or crypto assets. For instance, the SEC in Nigeria, at the time of writing, has no dedicated investor education for virtual assets specifically. Although it has funds budgeted for the entire capital market this year, which according to the Director General of the SEC, Dr. Emomotimi Agama, in a recent report, is up to ₦10 billion. Without an efficient and well-funded investor education program, it will be difficult to nip Ponzi Schemes in the bud in the country.
Collaboration with industry stakeholders: Regulators should work closely with industry stakeholders to develop effective regulations and best practices. While government regulation is vital, the place of self-regulation as a complimentary support, by way of adoption of Codes of Conduct and global best practices, cannot be over-emphasized. Thankfully, the Investments and Securities Act 2025 provides for the registration of self-regulatory organizations in the capital market. Operators, including those in the virtual assets industry, should be encouraged and provided the necessary support to take advantage of the window that self-regulation offers. Government cannot do it alone.
Increased enforcement: Regulators should have the resources and authority to effectively enforce regulations and shut down Ponzi schemes. Commendably, the new Investments and Securities Act 2025 has empowered the SEC with the authority it requires to fight Ponzi schemes. The challenge now is ensuring that the SEC has adequate financial and human capital to implement the provisions of the law and bring bad actors to book.

Also speaking with CAB, Chioma Onyekelu, a compliance professional and Blockchain Forensics Specialist at A&D Forensics, condemned the menace of Ponzi schemes in the country, recommending how best regulators can address the plague. Onyekelu recommends a “proactive use of social media to expose suspicious platforms and educate the public” as the “key to winning the information war against these fraudsters.”

Indeed, regulators and other relevant agencies need to take a more proactive approach to identifying and shutting down Ponzi schemes, rather than simply reacting to them after they have caused harm to Nigerians.

How Regulators Can Be More Proactive

To be more proactive about Ponzi schemes in Nigeria, the SEC and other relevant regulators can consider taking the following steps:

Enhanced Surveillance: Invest in and implement advanced monitoring systems to detect suspicious activities and identify potential Ponzi schemes early. Given the limited resources of the SEC and other relevant agencies, leveraging strategic multistakeholder cooperation is vital here.
Public Education: Conduct regular awareness campaigns to educate the public about the risks of Ponzi schemes, how to identify them, and the importance of verifying investment opportunities.
Collaboration: Work closely with industry stakeholders, law enforcement agencies, and other regulatory bodies to share information and best practices.
Whistleblower Protection: Establish and publicize a whistleblower protection program to encourage individuals to report suspicious activities without fear of retaliation.
Proactive Investigations: Conduct proactive investigations into suspicious investment schemes, rather than waiting for complaints or reports. A regulator such as the SEC should not wait to receive a complaint or report before getting interested in a questionable scheme within its purview.
Registration and Licensing: Ensure that all investment platforms and schemes are registered and licensed, and verify their legitimacy before allowing them to operate.
Regulatory Framework: Continue to develop and refine regulations to address emerging trends and risks in the financial industry, including cryptocurrency and digital assets.
Risk-Based Approach: Never permit or encourage unclear or uncertain regulation that leaves vital areas in the grey space that may be unduly exploited by bad actors. Take a risk-based approach to regulation, focusing on high-risk areas and schemes that are more likely to be Ponzi schemes.
International Cooperation: Collaborate with international regulatory bodies to share information and best practices, and to address cross-border Ponzi schemes. Interestingly, in CBEX’s case, CBEX was flagged in 2024 by the Hong Kong Securities and Futures Commission (SFC). Being co-members of the International Organization of Securities and Exchange Commissions (IOSCO) with Nigeria’s SEC, one would have expected the SEC to have had prior knowledge of the operations of CBEX and the imminent danger of dealing with it.

Taiwo observed that while regulators can issue warnings about bad actors and law enforcement agencies can arrest offenders, “education presents the proactive solution”. This, he believes, is because certain agencies, such as law enforcement agencies and to some extent regulators, are inherently reactive by design. “But when people are proactive as a result of sound crypto knowledge, they can easily beat bad actors,” Taiwo pointed out.

Also, Onyekelu emphasized the need for prompt investigations and public advisories by relevant agencies: “To curb the rise of Ponzi schemes in Nigeria, regulators and law enforcement must be decisive and immediate. New investment schemes should be promptly investigated, and public advisories should be issued to warn citizens before the schemes gain traction.”

“Authorities must publicly name and pursue the promoters, cutting off their ability to organize flashy events or aggressively market to the public. This visible action will deter fraudsters, build public confidence, and prevent the sudden collapse of schemes that leave thousands of citizens stranded,” Onyekelu said.

Conclusion

Ponzi schemes have become a plague in Nigeria, fed by a combination of socio-cultural and economic factors. While financial illiteracy due to lack of public education and awareness is a major driver, greed is undeniable. The medicine-after-death actions of relevant regulators and agencies are not also helping matters. Noticeably, proactiveness is significantly lacking here.

Apart from continuous improvement and adaptation to emerging trends and risks, efficient and effective implementation of the new Investment and Securities Act 2025 and other relevant legislation and regulations is vital in Nigeria’s digital investments space. Policing the ever-dynamic investment space is the responsibility of us all. This is where stakeholder collaboration comes in. Amongst other factors, Nigeria’s unique demographic factors and socio-cultural and economic dynamics demand it.

By taking proactive steps, the SEC and other relevant agencies can help to effectively curb Ponzi schemes in Nigeria, protect investors, and promote a safer and more transparent financial environment in Nigeria. Amongst other things, Nigeria must invest heavily in public education, not only in the capital market, but widely. Also, there may be a need for a nationwide campaign against the Ponzi mindset in the country. Education and awareness is key. And this is where an investor education fund comes in—a well-funded one that industry operators can be encouraged to be a part of.

“It’s time for more Nigerians to choose knowledge over quick money—and build real, sustainable wealth,” Ophi said.

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Why CBEX Will Happen Again in Nigeria, If Stakeholders Don’t Do Things Differently