"Ponzi Schemes: How Greed, Desire For Quick Returns Burn \u2018Investors\u2019 Fingers"

" Ponzi Schemes: How Greed, Desire For Quick Returns Burn \u2018Investors\u2019 Fingers \r\n\r\nIn a small grocery store tucked in a quiet corner of Ibadan, Yetunde Olakunle stares blankly at half-empty shelves. The store owner had invested N700,000, nearly all the money she had set aside to restock her shop, into CBEX, a digital trading platform that promised a 100 percent return within 30 days. The investment was made at the end of March. Barely three weeks later, CBEX crashed, and Yetunde\u2019s hopes went down with it.\r\n\r\n\u201cI was told I would get N1.4 million by the end of April,\u201d she said, frustration and disbelief lining her voice.\r\n\r\n\u201cI wanted to restock the store, add new products, and boost my business. Now, I am back to zero,\u201d she said.\r\n\r\nUloma Anyadike, a small bakery owner, who invested N1 million in a Yaba, Lagos-based ponzi scheme, is already in court with her friend who introduced her to the people she described as \u2018smart\u2019 fraudsters.\r\n\r\nIn her case, it was the promise of 100 percent in 24 weeks that lured her and a fully paid holiday trip to Zanzibar, if she increased or subscribed back-to-back to the investment in one year.\r\n\r\nAt the maturity of her second investment, which was double of her initial one, the scheme closed shop, their contacts did not connect and her friend left town until he was spotted at Sangotedo, Lekki, Lagos.\r\n\r\n\u201cWhen I registered, they called it Mega Pay, later they changed to Sure Pay. They have many names for different people they have defrauded. Now, my plan of buying a modern oven is dashed,\u201d she lamented, blaming her loss on her greed.\r\n\r\nThe above stories echoed the sad realities of countless others across the country, students, traders, artisans, and professionals, many of whom poured life savings into ponzi schemes, lured by bold promises and a hunger for survival in a worsening economy.\r\n\r\n CBEX: The latest fraud in a long chain \r\n\r\nLaunched in Nigeria in July 2024, CBEX marketed itself as a digital trading platform with a simple hook: invest and double your money in 30 days. With physical offices in some cities and aggressive online marketing, it appeared legitimate. But CBEX was never registered with the Securities and Exchange Commission (SEC). It was, in truth, a classic Ponzi scheme, using new investors\u2019 money to pay old ones, until the chain snapped.\r\n\r\nBy April 2025, CBEX crashed, leaving an estimated N1.3 trillion in investor losses. In Ibadan\u2019s Oke Ado area, the fallout turned physical as angry victims stormed and looted the office of Smart Treasure, a CBEX affiliate.\r\n\r\nFrom roadside traders in Ibadan to undergraduates in Lagos, the fallout has been national and devastating.\r\n\r\n\u201cI invested N150,000 I was saving to pay school fees,\u201d said Samuel, a Lagos-based student. \u201cI am very frustrated now.\u201d\r\n\r\n A national epidemic of fraud \r\n\r\nAccording to the Nigeria Deposit Insurance Corporation (NDIC) report in 2022, Nigerians have lost over N911.45 billion to Ponzi schemes and related frauds in the last 23 years. MMM, the most infamous among them, accounted for N18 billion before its 2016 crash. CBEX surpassed that scale in less than one year.\r\n\r\nFor many Nigerians, the lure of 100 percent return on investment (ROI) is not just greed, it is survival. With rising food prices and declining purchasing power, the promise of fast cash seems like a lifeline.\r\n\r\nSamson Simon, an Economics lecturer at Baze University, Abuja, and head of the consultancy ARKK Economics and Data Limited, attributed the persistence of Ponzi schemes to a combination of economic hardship, low financial literacy, and human desperation.\r\n\r\n\u201cPonzi schemes tend to be most popular when people are in the throes of chronic economic malaise,\u201d Simon told BusinessDay. \u201cNigerians are currently experiencing the worst cost-of-living crisis in a generation, making them vulnerable to any quick-money scheme.\u201d\r\n\r\nHe added that many Nigerians struggle to discern genuine investment opportunities from fraudulent ones due to lack of financial education.\r\n\r\n\u201cSeeking professional advice can help, but how many can afford that?\u201d he asked. \u201cAnd even people who know the risks sometimes jump in, thinking they can make quick gains and exit before the crash.\u201d\r\n\r\nBut Juliet Anazodo, an entrepreneur, who did not fall to the lures of a ponzi scheme run by a close friend, blamed the high rate of casualties on the society, which has encouraged wealth, no matter how it is acquired.\r\n\r\n\u201cYoung musicians are singing that if you don\u2019t make money, what is the gain? Parents are enjoying money from their \u2018Yahoo-Boy\u2019 children, people in power are embezzling public funds, and corruption is the order of the day. So, the ponzi guys are taking advantage of the rot out there and greed for money is offering them customers,\u201d she noted.\r\n\r\n Is the government doing enough? \r\n\r\nChijioke Umelahi, an Abuja-based lawyer, thinks that the government has not done enough to curb the menace.\r\n\r\n\u201cWe all witnessed MMM, which I consider the most infamous ponzi scheme in Nigeria,\u201d he said.\r\n\r\n\u201cFor more ponzi schemes to still operate and defraud people today, it means that the government and its agencies did not learn anything from that sad reality. The EFCC, police and others should not put up any defence because we hear more from people being defrauded and less from those rescued by our security outfits.\u201d\r\n\r\nBut amid the public outcry, regulatory agencies have defended their record. The Economic and Financial Crimes Commission (EFCC), for instance, claims it was monitoring CBEX before the collapse.\r\n\r\n\u201cWe were not beaten by what happened,\u201d Dele Oyewale, EFCC spokesperson, said during an appearance on Channels TV on Wednesday. \u201cOur dragnet is wide, our intelligence is very effective, and we were tracking that digital trading platform.\u201d\r\n\r\nOyewale also revealed that the EFCC received numerous distress calls and had launched a deeper investigation to track the platform\u2019s masterminds. The agency has promised to recover lost funds, though no timeline has been provided.\r\n\r\nMeanwhile, the Securities and Exchange Commission (SEC) has issued multiple cease-and-desist orders against unregistered platforms like CBEX, and forwarded their cases to the EFCC. Under Nigeria\u2019s newly revised Investment and Securities Act (ISA) 2025, Ponzi scheme operators now face up to 10 years in prison and a N20 million fine. Still, critics argue that enforcement often comes too late.\r\n\r\nHowever, experts like Simon believe these efforts are reactive rather than proactive.\r\n\r\n\u201cThe government is not doing enough,\u201d he said. \u201cIt should go beyond warnings to taking swift action to shut these schemes down before they spread. There is also a need for stricter enforcement and real consequences, something strong enough to deter others from trying it again.\u201d\r\n\r\nEfforts to raise financial literacy are gaining traction but remain slow. Victims like Yetunde want more than promises, they want justice and support.\r\n\r\n\u201cI just want my money back,\u201d she said. \u201cEven if it is not everything, just something to start again.\u201d\r\n\r\nAs the dust settles on the CBEX collapse, questions remain. Can the authorities truly stop the next wave? Or will the economic climate, digital anonymity, and public desperation continue to fuel the fire?\r\n\r\nUmelahi thinks that the next wave can be stopped if the authorities are sincere in fighting operators of ponzi schemes because they can track, prosecute them and the stolen millions refunded to the risk-taking owners.\r\n\r\nUntil financial education meets effective regulation, and poverty is tackled at its root, the cycle may never end, and more Nigerians, like Yetunde and Uloma will be left holding the ashes."

"Ponzi Schemes: How Greed, Desire For Quick Returns Burn \u2018Investors\u2019 Fingers"

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