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CBEX Collapse: Nigeria's largest ponzi scheme leaves millions in financial ruin

POSTED ON April 16, 2025 •   Metro      BY Abiodun Saheed Omodara
CBEX ponzi scheme

Grief, shock, and remorse have engulfed numerous Nigerians following the sudden disappearance of CBEX, a once-admired digital asset platform that vanished without a trace, taking an estimated N1.4 trillion of life savings, pensions, and borrowed aspirations with it. 

This collapse has been marked as the largest Ponzi scheme in the nation’s history. When combined with an estimated N300 billion lost previously, Nigerians may have seen N1.7 trillion evaporate due to Ponzi schemes over nine years since 2016, excluding losses from cryptocurrency trading and the recent IAS failure.

CBEX, a trading platform that attracted many investors with promises of high returns, reportedly froze on Monday, leaving countless subscribers in a state of panic.

The precise number of Nigerians affected or the total funds lost remains uncertain, although reports estimate the loss to be around N1.4 trillion  a figure not independently verify at the time of reporting.

A cryptocurrency specialist, Taiwo Owolabi, claimed in a report that approximately $847 million USDT was redirected from CBEX to private wallets. At an exchange rate of N1650 per USDT, this translates to N1.4 trillion.

Owolabi also observed that CBEX operated by channeling investors' funds through various digital assets and wallets, complicating the tracing of exact amounts.

Data from the Securities and Exchange Commission (SEC) indicates that Nigerians lost an estimated N300 billion to Ponzi schemes between 2016 and 2023. In the past two years, IAS and other schemes have collapsed, with billions of naira belonging to struggling Nigerians becoming ensnared.

The younger population, which largely subscribed to these schemes, lost significant amounts in various crypto projects that either collapsed or drastically reduced in value.

 

The collapse of CBEX is likely to have triggered waves of emotional, financial, and health crises across the country.

Victims from Lagos to Port Harcourt, Abuja to Ibadan, have shared heart-wrenching stories of lost savings, shattered dreams, and emotional distress.

In Ibadan alone, over 27 people have reportedly been hospitalized, leading to calls for government intervention and subsidized medical care. Should the government respond, it risks subsidizing the consequences of greed and reckless decision-making by young Nigerians who, desperate to survive against challenging circumstances, are investing in unconventional money-doubling schemes. Moreover, this may also entail diverting resources that could have been utilized for infrastructure development and job creation.

Report has it that the scale of this fraud may necessitate an international investigation, especially since some of the platform’s operations involved cryptocurrency transactions and cross-border money movements.

Nigerian investors and civil society organizations are currently urging the government to form a recovery task force and compensation framework, akin to measures taken in other countries after large-scale investment frauds.

CBEX has now joined an expanding list of digital Ponzi-like enterprises that have exploited Nigerians in recent years. From MMM to Racksterli, Chinmark Group to Loom and IAS, each has followed a familiar pattern — grand promises, rapid growth, and sudden collapse when activities peaked, resulting in financial devastation and broken trust.

Despite repeated warnings from the SEC, desperate investors kept injecting money into CBEX. Nevertheless, recent events suggest that regulators are bracing for stronger action against such deceptive platforms.

In March, President Bola Tinubu enacted the amended Investment and Securities Act (ISA) 2025, a comprehensive reform targeting enhanced investor protection and stricter oversight of Nigeria’s capital market. One of its most pivotal measures directly addresses the issue of Ponzi schemes.

The new law criminalizes the operation and promotion of Ponzi schemes, granting the SEC the authority to prosecute offenders with sentences of up to 10 years in prison. This marks a significant departure from previous regulatory approaches, which lacked the power to impose serious penalties on fraudulent investment entities.

However, while the revised Investment and Securities Act 2025 is seen as a major advancement, some investors contend that legislation alone will not suffice to curtail the surge of financial scams afflicting the nation.

Many believe the root problem lies in the widespread lack of investor education. Independent investor Amaechi Egbo asserted that beyond greed, ignorance is exacerbating the crisis.

 He noted that many Nigerians fail to distinguish between legitimate investments and fraud schemes, they see glowing online testimonials and jump in, oblivious to the risks involved.

Egbo stressed that unless the government spearheads aggressive, nationwide campaigns to educate investors, such schemes will continue to thrive, especially in an economy struggling with inflation, unemployment, and poverty.

He remarked that inadequate financial literacy, desperation, and the allure of quick wealth have rendered many citizens vulnerable to manipulation.

“This issue transcends the sudden disappearance of a single platform; it signifies a deeper crisis, a lack of investor education, weak regulation of digital assets, and a growing sense of desperation among the populace. This trend will likely persist unless comprehensive education campaigns are implemented. People need to grasp how these scams operate, not merely be advised to avoid them,” he stated.

 

President of the Independent Shareholders Association of Nigeria, Moses Igbrude advocated for a multifaceted approach to combat the escalating prevalence of Ponzi schemes and digital investment scams.

He articulated that addressing Ponzi schemes requires more than just regulatory declarations; it necessitates a sustained commitment to financial education, targeted initiatives to alleviate poverty, and a determined effort from the SEC to pursue legal action against fraudsters.

“We must consistently inform the public to abandon the get-rich-quick mindset. Without genuine economic empowerment and tangible consequences for con artists, these schemes will keep proliferating,” he asserted.

President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, viewed the amended Investment and Securities Act (ISA) 2025 as a crucial turning point. He noted that the law explicitly forbids the operation and patronage of unregistered investment firms.

However, he pointed out a notable gap: the SEC can only regulate companies that choose to register with it, leaving a loophole for unregistered platforms to operate unchecked.

“Those who engage with unregistered investment firms do so at their own risk,” Ajudua stated. Nevertheless, he insisted that the SEC must confront and shut down such illegal operations while amplifying awareness campaigns to protect unsuspecting investors from fraudulent schemes.

Eric Akinduro, President of the Ibadan Zone Shareholders Association of Nigeria, echoed these sentiments and highlighted the necessity for enhanced regulatory vigilance. While he recognized the regulators' efforts, he argued that greater emphasis must be placed on monitoring and controlling the activities of these fraudulent platforms before they spiral out of control.

“Some of these platforms claim to be registered, but what regulatory measures are genuinely in place?” he questioned. He criticized the limited scope of current awareness programs, which often remain hidden on agency websites, advocating for the utilization of social media to broaden outreach and financial literacy efforts.

“Nigerians don’t seem to learn from past mistakes. We continually fall for the same deceptions because we are enticed by easy money, and it invariably backfires. While the introduction of stronger laws like ISA 2025 is essential, enforcement, education, and proactive communication must work hand in hand if Nigeria is to triumph over digital financial scams.”

The CBEX platform, which functioned without registration or regulatory oversight, abruptly shut down on Monday, leaving thousands of investors bewildered and stranded. CBEX had promised enticing returns, including 100 percent profit on investments within 30 days — an offer many found irresistible in a country grappling with inflation, job losses, and economic hardship, forcing many to seek alternative income sources.

For weeks, CBEX appeared to be a financial miracle, attracting a diverse group of Nigerians, including everyday citizens, professionals, traders, and retirees, who bought into its promise of rapid and guaranteed profitability.

From WhatsApp groups to Instagram accounts and online forums, glowing testimonials and screenshots of purported earnings fueled a digital frenzy. Referral incentives became commonplace; the more people one recruited, the greater the returns.

However, by Monday morning, the dream turned into a nightmare. The platform disappeared without notice, its website became inaccessible, the mobile app crashed, customer support channels ceased operation, and its once-active social media pages fell eerily silent. In an instant, CBEX was gone, along with billions of naira belonging to investors.

“I was convinced it was genuine due to the number of people endorsing it,” said a small business owner from Port Harcourt who invested N2 million in the scheme. “I never dreamed I could be scammed like this. Now, I can't sleep,” lamented another subscriber.

Similar accounts are widespread. Victims from Lagos, Abuja, Enugu, and beyond have flooded online platforms with cries of despair, sharing screenshots of depleted balances and demanding accountability. The emotional toll is substantial, with some investors reportedly exhausting their life savings and others incurring heavy debt in hopes of quick profits.

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