Apr 16, 2025 (Premium Times/All Africa Global Media via COMTEX) --
"In less than 35 days, I was supposed to receive $600, the double of my $300 investment," an investor said.
When Okikiola Abdul invested $300 in a supposed forex trading platform, Cryptocurrency Exchange (CBEX), in March, he hoped to use the proceeds from his investment to rent a new apartment and finish up some personal projects.
First, the idea of a 100 per cent return on investment promised by CBEX seemed too good to be true. But Mr Abdul, who recently completed his degree programme at Ekiti State University, nursed fears that the forex trading platform could be a new Ponzi scheme. Yet, a close friend who had traded on the platform for six months managed to convince him.
"In less than 35 days, I was supposed to receive $600, the double of my $300 investment," he said.
However, a post by a popular X user, Man of Letters (@Letter_to_Jack), set off a chain of events that would crash the dreams of Mr Abdul and hundreds of investors like him.
On Wednesday, 9 April, @Letter_to_Jack posted that CBEX was likely a Ponzi scheme despite investors' impressive gains. He predicted that the digital investment platform would soon crash and warned wainvestors to exit before it was too late.
"Someone told me about a 'CBEX' this evening. They invested $1k and have since withdrawn $5k this year. Having done all my checks, the platform flies all the flags of a Ponzi scheme. People are cashing out steady with no losses. You know what that means? Easter, Ileya or Xmas.
"For those who don't understand, what I'm telling you is the crash is imminent; it's better to use your money to play bet than to go into this. It's at best a zero sum game. You will cry," he wrote.
The post gathered over a million views on X and became one of the trending topics on the blogging site.
What is CBEX and how does it operate?
On its website, CBEX introduced itself as a company established in Singapore in 2015 and claimed to have been revolutionising crypto-trading with AI-powered signals in partnership with ST.It described itself as a global digital asset trading platform that allowed users to trade cryptocurrencies and earn high returns on their investments.
Investors say they were promised a 100 per cent return on investment in just one month using a minimum of $100 dollars to trade. Typical of a Ponzi schemes, CBEX used a referral and reward method to attract investors. An existing user registered an interested investor using his or her referral link. The referrer (upline) gets a 10 per cent referral bonus while the new investor gets a 10 per cent sign-up bonus.
Payments were made in USDT, a popular stablecoin that runs on blockchain and is linked to traditional currencies like the US dollar.
The new investor was then added to a Telegram group where trading signals were posted. The job of the investor was to copy the signals and paste them to the trading section of the CBEX trading app. After the trade was confirmed, tokens were added to their balance.
The fall of CBEX
A Ponzi scheme relies on the delicate balance between deposits and withdrawals. When withdrawals exceed deposits, the scheme collapses.
After the warning by X user, @Letter_to_Jack, trended, investors began having difficulty making withdrawals. By Thursday (10 April), users indicated that withdrawals had been suspended, with the platform citing "system upgrades" and assuring access by 15 April.
However, Mr Abdul, like many investors, said his balance read a total asset of zero dollars. The investment of $1,200 he made on behalf of a close relative could also not be accounted for.
CBEX allegedly locked its Telegram channels and delayed withdrawals. To access their funds, investors were offered a "verification" process: pay $200 to unlock $2,000 or $100 to unlock $1,000.
Like hundreds of Nigerians who have lost their investments, Mr Abdul says he can never recover his money from CBEX. He says the situation has left him feeling very low.
"Just this morning, my colleagues were laughing at me. I was eating, scrolling through Instagram, and saw something funny. I smiled, then remembered I lost money to CBEX. Instantly, I dropped from 100 per cent to zero emotionally," he said.
Videos of people who have lost money to the Ponzi scheme has flooded social media.
The estimated losses are pegged at N1.3 trillion, according to a recent analysis by Taiwo Owolabi, a cryptocurrency expert and security. The analysis showed how investors' funds were diverted into a central wallet, which was holding at least $857 million in USDT (equivalent of N1.3 trillion).
In Ibadan, the Oyo State capital, an angry mob looted the CBEX office located in the Oke Ado area of the state. In widely circulated videos, people were seen carting away office equipment and furniture.
SEC speaks
Reacting to the development, the Securities and Exchange Commission (SEC) warned Nigerians against unregistered trading platforms.
In a statement on Sunday, SEC said the newly enacted Investments and Securities Act 2025 made it illegal to operate digital asset exchanges or online foreign exchange trading platforms without formal registration with the commission.
"By virtue of this Act, it is an offence in Nigeria for any entity that is not registered by the commission to carry out the business of online foreign exchange trading platforms or related services," the agency said.
According to SEC, operating a Ponzi scheme now carries a minimum penalty of N20 million, with 10 years or more jail terms under the new law.
Nigerians' romance with ponzi schemes
CBEX is not Nigeria's first encounter with Ponzi schemes, as the country has seen numerous similar cases in the past. However, the most memorable scheme which shook the nation and left many in financial ruins was the infamous Mavrodi Mundial Moneybox (MMM) in 2016.
MMM was founded by a Russian, Sergei Mavrodi. Using the tag line of "social financial network" aimed at "providing help," the Ponzi scheme promised a 30 per cent monthly return to investors. It attracted over three million Nigerians who were desperate for financial gain.
Despite warnings from the Central Bank of Nigeria (CBN), many Nigerians invested heavily in the scheme. The initial returns made from deposits made the scheme more popular. As the Christmas season drew near, investors began having difficulty in making withdrawals.
By December, the scheme crashed. MMM froze all accounts citing "system overload" to "prevent problems during the Yuletide." The crash of MMM caused unprecedented havoc to the nation. Many were left penniless, and some even committed suicide.
The 2016 MMM Ponzi scheme left Nigerians with an estimated N18 billion losses, according to a rough estimate by the Nigerian Deposit Insurance Corporation (NDIC). Yet, the promise of easy gains continues to lure people into similar schemes, allowing them to persist.
Similar to the CBEX case, investors in MMM and other Ponzi schemes often disregarded warning signs such as the unregistered status of the platforms, enabling them to operate outside government regulations.
They also overlooked the unsustainable returns on investment typically promised by these platforms, which were designed to exploit their greed.
Also, many of these platforms lacked clearly identifiable owners, promoters, or executives--another early warning sign that investors, enticed by the prospect of too-good-to-be-true returns, often ignored.
COMTEX_464606596/2029/2025-04-16T07:03:15
by Folashade Ogunrinde
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