The reported loss of about N1.7 trillion in Nigerians’ life savings, pensions and borrowed funds is phenomenon and troubling. Against the chances of such losses being replicated over the years across the country, it is equally worrying that relevant Nigerian financial regulatory agencies have been performing disappointingly. To curb the ugly trend and to prevent more Nigerians from being dragged into poverty unwittingly or otherwise, the government’s regulatory agencies should come up with an appropriate strategy to address the problem. It is therefore encouraging that the Securities and Exchange Commission (SEC) has more recently warned Nigerians of the emergence of a new illegal investment platform called Tofro.
The incidence of dubious investment schemes in Nigeria has always left in its wake a plethora of regret, wailing and gnashing of teeth. The latest collapse of the Crypto Bridge Exchange (CBEX) digital asset platform, an unregistered scheme, is reminiscent of the recurring trauma the average investment-savvy Nigerian is forced to pass through which always “leave a bitter taste in the mouth”.
Globally, these dubious schemes are known as the Ponzi scheme, named after Charles Ponzi, the Italian immigrant who came to America and who in 1920, took investors’ money under the pretext of investing in international reply coupons. Though Charles Ponzi wasn’t the first to implement such a scam, his was of great magnitude that such dubious schemes have now come to be named after him.
Ponzi’s investment idea was plausible. He could buy reply coupons in a different country where they were cheaper and then sell them in the United States, where they were worth more. The mechanics of conducting business overseas caused delays and extra costs that prevented him from paying investors as quickly as he’d promised. He kept the bad news to himself, so new, excited investors who heard about the idea joined and handed over their savings. Because his early investors were making money, no one was complaining. The whole thing fell apart after a few months of Ponzi living lavishly on the millions he had made. That is how these dubious investment schemes end up.
The get-rich-quick mentality is not peculiar to Nigeria, but the role of the regulators in the whole brouhaha is of great significance if this recurring crisis is to be nipped in the bud. The case of CBEX is not the only tragedy in investment schemes in Nigeria. Before now, there was MMM, Racksteli, Chinmark group, Loom and then IAS, all following a similar script – big promises, rapid expansion and eventually “sudden death” of the scheme with losers trapped in the scheme licking their wounds. Incidentally, however, it appears Nigerians are yet to learn and exercise some precaution before getting involved in such “overly profitable” schemes.
Estimates indicate that the loss from the CBEX platform is a whopping N1.4 trillion in people’s life savings, pensions and borrowed funds. This is not accounting for an estimated N300 billion lost previously to other schemes, hence totalling about N1.7 trillion in about nine years since 2016. What a loss. Evolving reports on the incident indicate that approximately $847 million was created and diverted from CBEX to private wallets. This is because the platform operates by moving investors’ funds through various digital assets and wallets.
It is hence difficult to trace the flow of these funds. This is where the regulators could latch on to and vigorously interrogate the scheme managers and ensure that appropriate sanctions are applied as necessary. The work of the Securities and Exchange Commission (SEC) is cut out for it on this issue moreover with President Bola Ahmed Tinubu recently signing into law the amended Investment and Securities Act (ISA, 2025) in March this year, which includes sweeping reforms at strengthening investor protection as well as tightening oversight of the country’s capital markets.
The question, however, arises as to why Nigerians often fall for such schemes. Could it be the quest to get rich quickly, pervasive societal greed, the prevailing economic challenges the country is currently going through or simply ignorance? It appears to be all of the above. The get rich quick syndrome is pervasive in the country moreover, when the average income profile in the country is very low. Nigeria’s income per capita has fallen drastically over the years. A minimum monthly wage of N70,000 is barely enough to sustain a poor family of four for half of the month. People thus resort to any means available to augment their miserable income from other sources, with the urge to take unnecessary risks, moreover, when they can see one or two persons who have benefitted from such schemes unscathed. They hardly know that the early successes of such schemes are a sort of bait to lure others in before the hammer falls on all.
Nigeria, as a society, both in the private and public sectors of the economy, should pay its workers a living wage, else such trauma will be unending. The way political office holders flaunt their wealth is often so tempting that hard-working Nigerians easily fall prey to solicitations for mouth-watering investments, no matter how suspicious they may be, just to eke out a living and thus “keep up with the Joneses.”
The way out of this imbroglio rests on the government through the regulatory authorities as well as on the people. First, the SEC should ensure that all companies that are involved in investment schemes in the country are registered with it. The full weight of the law, especially the newly amended Investment and Securities Act (ISA, 2025), should be applied to any defaulters. Any scheme found to be in operation in the investment space without being registered with the SEC should be shut down and the managers brought to book.
For example, it was reported that CBEX, the culprit in this case, is not a registered entity with the SEC and one wonders why the SEC should allow such an outfit to operate unhindered. On the other hand, there is a great need for investor education nationwide, maybe through the National Orientation Agency, to enlighten Nigerians on the dangers of dubious investment schemes and that it pays to be risk-averse in a turbulent investment environment where dubious characters could take advantage of people’s quest to make ends meet.
The people, on the other hand, should be wary of offers that appear “too good to be true.” They should learn from the past and avoid the recurrence of such trauma as is currently the case. Nigerians should also be encouraged to embrace alternative investment schemes like the FGN bonds and other securities. Like cooperative societies, investment products should be taken to the bottom of the pyramid to avoid Ponzi scams.
