The Securities and Exchange Commission (SEC) of Nigeria has issued a stern warning regarding the operations of CBEX, a digital asset trading platform that has recently come under scrutiny for its legality and financial practices. During a virtual meeting with fintech stakeholders on April 14, 2025, SEC Director General Emomotimi Agama emphasized that any platform not registered with the SEC is operating illegally. This warning follows widespread reports of users being unable to withdraw their funds from CBEX, raising concerns about the platform's legitimacy.
Social media buzzed with alarm on April 11, 2025, as users expressed fears that CBEX might be a Ponzi scheme after they found themselves unable to access their accounts. "Very recently, there has been a post that has gone viral around a particular platform and the activities of such platforms. And of course, the aftermath of it is further news of their closure and all of that. In fact, I was tagged in one of those messages. I want to state it very clearly. If it is not registered, it is illegal," Agama stated, without naming CBEX directly.
CBEX, which claims to provide a 100% return on investment within one month, has drawn skepticism from many users who suspect it operates under Ponzi scheme principles. The platform, which began operations in Nigeria in late 2024, has been accused of displaying misleading withdrawal records and imposing burdensome withdrawal processes. Users report that their accounts showed zero balances after the withdrawal feature was suspended on April 9, 2025, ostensibly for system upgrades.
Amidst the chaos, some users took to social media to voice their frustrations, while others blamed the investors for ignoring previous warnings about such investment schemes. One investor, identified as Ola, lamented, "I lose 450,000 naira," referring to his investment in CBEX. The platform’s referral-driven incentive scheme, which rewards users for recruiting new members, has further fueled concerns that it resembles a classic Ponzi scheme.
In response to the mounting public outrage, a group of angry youths stormed the CBEX office in Ibadan on April 14, 2025, looting items and causing damage. This incident highlights the desperation and anger felt by those who invested their hard-earned money into the platform, only to find themselves facing significant financial loss.
The SEC's warning comes on the heels of the recently signed Investment and Securities Act (ISA) 2025, which establishes clear rules for digital asset platforms, including mandatory registration with the SEC. Under the new law, operators of Ponzi schemes can face up to 10 years in prison and hefty fines. Agama noted that the SEC is now empowered to prosecute promoters of Ponzi schemes, which was not possible before the legislation was enacted.
Ponzi schemes have a long history in Nigeria, exploiting economic vulnerabilities and the allure of quick wealth. From the infamous Mavrodi Mondial Moneybox (MMM) in the mid-2010s to the current CBEX controversy, these schemes have left a trail of financial ruin and exposed regulatory gaps. The roots of Ponzi schemes in Nigeria date back to the 1980s and 1990s, with early examples like the Umana-Umana platform in Port Harcourt and Calabar, which promised exponential returns but ultimately collapsed.
The modern era of Ponzi schemes in Nigeria was defined by the arrival of MMM in 2015, which attracted millions of Nigerians during a time of economic hardship. Despite warnings from the Central Bank of Nigeria (CBN) and other regulators, many ignored the red flags, leading to catastrophic losses when the platform froze accounts in December 2016. The fallout from MMM resulted in significant financial losses, suicides, and broken families.
Following the collapse of MMM, a surge of copycat schemes emerged, including Twinkas, Ultimate Cycler, and MBA Forex, which collectively swindled billions from unsuspecting investors. By 2022, the Nigeria Deposit Insurance Corporation (NDIC) estimated that Nigerians had lost approximately N911.45 billion to Ponzi schemes over 23 years, with N300 billion lost in the five years following the MMM debacle.
As the CBEX saga unfolds, it has reignited public outrage and skepticism towards investment platforms promising unrealistic returns. The platform's aggressive marketing and referral incentives have drawn comparisons to past schemes like MMM and Racksterli. Investors are now urged to exercise caution and conduct thorough research before committing funds to any platform.
Experts advocate for improved financial literacy among Nigerians, emphasizing the need to recognize red flags associated with Ponzi schemes, such as unrealistic returns, lack of transparency, and over-reliance on referrals. The SEC's new regulatory powers aim to enhance investor protection and maintain fairness in the capital market, but the effectiveness of these measures remains to be seen.
Until then, the ongoing fallout from the CBEX incident serves as a stark reminder of the risks associated with unregulated investment platforms. As many Nigerians grapple with the consequences of their investments, the call for stronger regulations and financial education has never been more urgent. The cycle of Ponzi schemes continues to exploit the vulnerabilities of a population seeking financial relief amidst economic challenges.
