Part 2: The CBEX Controversy and Regulatory Failures
3 min read
CBEX: The Latest Ponzi Scheme Controversy (2025)
Fast forward to April 2025, and the CBEX saga has reignited outrage across Nigeria. The platform, which promised high returns through vague investment models, has now folded. CBEX displayed classic Ponzi traits: unrealistic profits, reliance on new investors, and aggressive recruitment tactics. Distressed investors have taken to social media, sharing videos of chaotic scenes at CBEX offices in Lagos and Ibadan.
CBEX, which began operations in Nigeria in 2024, claimed to have existed since 2017, although this timeline contradicts its domain registration. The platform was marketed as an AI-driven investment vehicle that promised a 100% return on investment within just 30 days. Investment was accepted exclusively in USD, with no disclosed minimum or maximum limits, which appealed to a broad demographic.
The platform’s website was designed to resemble well-known exchanges like ByBit, creating a facade of legitimacy. However, there were no affiliations with recognized financial institutions. A key feature of CBEX was its referral-driven incentive scheme. Participants could earn bonuses for bringing in new users, with rewards increasing based on the size of their referral network.
Despite these incentives, CBEX imposed strict withdrawal conditions. New users were required to wait 40–45 days before accessing their funds, with early withdrawals attracting a 20% penalty. In some cases, users were asked to recruit at least 12 new referrals before being allowed to withdraw any profits. This shift from investing to recruitment raised concerns about the platform’s legitimacy.
In early April 2025, CBEX suspended withdrawals, citing “system upgrades.” However, reports of further delays and aggressive customer support urging additional deposits have heightened suspicions of potential fraud. While the total financial losses from CBEX remain unclear, public sentiment compares it to other notorious Ponzi schemes like MMM and Racksterli, suggesting that significant financial damage has occurred.
Why Ponzi Schemes Thrive in Nigeria
Nigeria’s high unemployment and inflation levels make it an ideal breeding ground for Ponzi schemes. In search of quick financial alternatives, many Nigerians fall prey to scams that promise returns far higher than traditional banks. These schemes exploit financial illiteracy, as many Nigerians lack the knowledge to differentiate between legitimate investments and fraudulent ones.
Moreover, until 2025, Nigerian regulations did not specifically ban Ponzi schemes, only requiring registration with the Securities and Exchange Commission (SEC). Banks have been implicated in laundering funds from these schemes but face little accountability, further undermining trust. Despite repeated warnings from the CBN and SEC, the desire for easy money often outweighs the caution advised by regulators.
Celebrity endorsements and influencer marketing have also fueled the popularity of Ponzi schemes. MMM relied on “guiders,” and CBEX used social media hype to attract new users. These tactics give scams a veneer of legitimacy, enticing more people to invest.
Regulatory Measures and the Way Forward
Although the SEC, CBN, and EFCC have issued warnings and shut down many schemes, enforcement remains weak. In 2019, the SEC blocked N1.12 billion in Ponzi-related bank accounts, but banks have faced no penalties for complicity. There are calls for improved monitoring and collaboration with fintech companies and the Nigerian Financial Intelligence Unit to identify suspicious transactions.
The Investments and Securities Act (ISA) 2025, signed into law by President Bola Tinubu, empowers the SEC to access critical information from telecommunications and internet service providers to identify fraudulent activities like insider trading and market manipulation. The law also enables the SEC to take decisive action against Ponzi promoters, imposing penalties such as fines of up to N20 million, prison sentences of up to 10 years, or both.
Additionally, the ISA 2025 mandates the use of Legal Entity Identifiers (LEIs) for capital market transactions, making it easier to monitor financial activities and reduce the risk of fraud.
Breaking the Cycle of Ponzi Schemes in Nigeria
Ponzi schemes have capitalized on Nigeria’s economic challenges, financial illiteracy, and regulatory weaknesses for decades. While the schemes promise financial freedom, they ultimately lead to devastation, costing billions and shattering lives.
The cycle of Ponzi schemes can only be broken through stronger laws, financial education, and inclusive banking practices. Until such measures are implemented, Nigeria risks repeating this painful history with every new fraudulent scheme.
About The Author
