…We’re not sleeping –SEC
By Chukwuma Umeorah
Many did not see the heist coming. It looked so real and reliable, especially after early callers successfully cashed out.
But the collapse of Crypto Bridge Exchange (CBEX), a supposed investment platform that operated unchecked for nearly nine months, has left thousands of Nigerians counting losses in excess of N1.3 trillion.
Packaged like a legitimate investment house, CBEX is the latest in a long list of Ponzi-style operations that have repeatedly preyed on the hopes and greed of unsuspecting citizens. Preliminary reports revealed that the promoters of the platform operated under a company registered as ST Technologies International Limited.
However, findings by Daily Sun and insights from key stakeholders have highlighted the toxic interplay of greed, public gullibility and regulatory shortcomings that continue to plague Nigeria’s financial landscape.
Despite repeated warnings from financial regulators and industry experts, Ponzi schemes continue to thrive in Nigeria.
Experts say the failure to learn from previous scams, combined with the inability or unwillingness of relevant authorities to proactively identify and clamp down on these entities, created the fertile ground upon which CBEX flourished.
Allure of quick returns
According to Vice Chairman of Highcap Securities, David Adonri, the key driver behind the persistent attraction to Ponzi schemes is greed, deeply rooted in a get-rich-quick mentality.
“A lot of Nigerians want to reap where they did not sow,” he said. “They are lured in easily with mouth-watering promises… When you set a bait for a rat, the rat is usually attracted by the bait. And in the process of grabbing the bait, the rat is grabbed.”
Adonri emphasised that while fraud exists globally, the frequency in Nigeria is exacerbated by widespread financial illiteracy and unrealistic expectations.
“The prevalence here is high because many Nigerians are driven by the desire to get rich without doing any work. It’s born out of greed,” he said.
He further noted that victims of Ponzi schemes often ignore well-publicised warnings and due diligence steps.
“There’s enough information in the public domain to deter anyone with sense. But some people are like dogs destined to be lost in the forest; they never heed the whistle of their masters.”
Adonri also shared a controversial view, suggesting that victims, in some cases, should not be entirely absolved of blame. “Many of them aid and abet these frauds. The government must mercilessly punish perpetrators, and in some cases, the victims too, because if they didn’t promote and spread these schemes, they wouldn’t grow.”
He added that investors can easily avoid such traps by consulting licensed professionals. “Be close to your stockbroker or banker. They are your first line of defence. And you can always verify firms via the SEC or CBN websites.”
Regulatory blind spots and institutional weakness
The ability of CBEX to operate for nine months and defraud investors on such a massive scale points to clear lapses in regulatory enforcement. Adonri attributes this to institutional fragility. “Nigeria has weak and compromised institutions. Agencies like the SEC and CBN don’t have secret police like DSS or CID that can sniff out fraud proactively. And even when they have information, they often don’t share it with sister agencies.”
He expressed deep concern over the lack of coordinated intelligence-sharing, saying, “EFCC might have information but won’t share it with the police. By the time action is taken, the scheme has already folded up and the operators are gone.” Adonri stressed that while the recently enacted Investment and Securities Act (ISA) 2025 provides tougher penalties including 10-year jail terms for Ponzi operators, it is only effective when properly enforced. “The law is there now, yes. But the institutions need capacity and integrity to wield it.”
SEC’s defence
Reacting to criticisms of regulatory laxity, the Director General of the Securities and Exchange Commission (SEC), Emomotimi Agama, insisted that the Commission had not been asleep. “We have carried out several public enlightenment programmes on the dangers of investing in unregistered schemes.
“From billboards to podcasts and active helplines, we have created multiple touchpoints for investor engagement.”
Agama also acknowledged the pain of affected CBEX investors and the difficulty of detecting unregistered entities like CBEX, but insisted the SEC’s hands are often tied until complaints are received.
“There are several unregistered entities the SEC is not aware of. That’s why we urge the public to report them. Once we have information, we move swiftly.”
He also notes that the SEC had successfully shut down some Ponzi schemes, with perpetrators like Fahmzi Interbiz jailed. However, the scale of the CBEX heist suggests that these measures have not been sufficient.
Is N1.3 trillion investor fund recoverable?
On the possibility of fund recovery for CBEX victims, Agama said that recovery efforts were ongoing with the EFCC and other relevant authorities, however the chance of success remained uncertain.
“It is our responsibility to pursue the fraudsters, trace the funds, and attempt confiscation. If we succeed, then redistribution can happen. But this is only possible when the entities involved are registered —if they were registered, our investor protection funds could have intervened.”
He noted that while investor education efforts are ongoing, ultimate responsibility still lies with the individual.
“We cannot force people to make the right investment decisions. We can only enlighten, and we will continue to do so.” Responding to a proposed N10 billion investor education fund by the Senate, Agama promised renewed strategy. “It’s not that previous efforts were ineffective. Some people are simply adamant. But we will re-strategize and use the right channels to reach more Nigerians.”
Red flags ignored
The Managing Director of Arthur Stevens Asset Management, (ASAM), Olatunde Amolegbe, offered a more structured analysis, linking the CBEX debacle to psychological and informational gaps.
“The quest to get rich quickly makes people ignore red flags. The informational aspect involves not doing due diligence before parting with money,” he said.
He stressed that a simple check on the CBN or SEC websites could prevent many losses.
“If the platform or product is not regulated or registered, then it’s already a red flag. But people still invest.”
Amolegbe also lamented the tendency of the public to blame regulators after a scam unfolds. “Unfortunately, it’s always easier to point accusing fingers than to take responsibility.
Implication on Nigeria’s capital market
Ponzi schemes not only harm individual investors but also damage the reputation of Nigeria’s formal capital market. Amolegbe notes that when unregulated schemes fail, investors often blame regulators or legitimate operators, creating a “net negative for the industry image-wise.”
This misperception, he stressed, undermines confidence in regulated markets, which offer protections like the National Investor Protection Fund for registered entities. He noted that to restore trust, regulators and operators must intensify efforts to differentiate legitimate investments from fraudulent ones.
The SEC’s ongoing collaboration with stakeholders and its aggressive pursuit of fraudsters under the ISA 2025 are steps in the right direction. On investor education, Amolegbe acknowledged that while there has been progress, the work is never done.
“Education is continuous. There will always be new scams and new tactics. The finance industry must keep pace.”
No pity for the greedy
From the shareholder community, Bisi Bakare of the Pragmatic Shareholders Association of Nigeria (PSAN) was frank and dismissive of the victims. “They are all armed robbers.
“Both the perpetrators and those who introduced others into it”, she said.
Bakare blamed Nigerians’ obsession with quick returns for the persistent popularity of Ponzi schemes.
“How can you give someone N500,000 and he promises N1.5 million in a week? What kind of business yields that?” she queried.
She noted that despite government and regulatory warnings, even dating back to the days of MMM, many still fall for these traps.
“This thing has been happening since the early 2000s. If you still fall for it today, you are either greedy or overambitious.”
Her Association, she said, focuses solely on capital market education and avoids discussions around unregulated investments.
“For over 30 years, I’ve only been involved in the capital market. I don’t even listen when someone brings those kinds of schemes to me.”
Punishing victims to deter participation
Protecting Nigerians from Ponzi schemes requires a multi-faceted approach that addresses both the supply (fraudsters) and demand (investors) sides of the problem. Experts who spoke to Daily Sun while suggesting stricter punishment for the victims themselves to serve as a deterrent, agree that there is a need to strike a balance.
They recommended a “stick-and-carrot” strategy, punishing willful or repeat offenders to deter reckless behaviour, while simultaneously ramping up public enlightenment campaigns to educate and protect first-time investors.
They described the victims as instruments to fraud.
“The government also needs to apply some punishment on the victims themselves for aiding and abetting the perpetration of fraud in Nigeria’s financial system.” They argue that cases such as CBEX continue to undermine the appeal of Nigeria’s investment ecosystem to foreign investors.
T-bills, Commercial Papers as legitimate short-term investment alternatives
In order to divert investors’ minds from ponzis, experts also recommend promoting regulated investment options that offer reasonable short-term returns in the money market, such as treasury bills and commercial papers, which yield 15-20 per cent annually. These instruments, while less lucrative than Ponzi schemes’ promises, are secure and regulated, offering protection through mechanisms like the Investor Protection Fund.