The recent warning by the Securities and Exchange Commission (SEC) regarding the proliferation of Artificial Intelligence-generated investment scams in Nigeria is a crucial alert on a situation that goes beyond standard market vigilance. It signals a perilous new frontier in financial fraud where human scepticism, which has always been the primary defence, is being systematically dismantled by technology.
Essentially, the SEC alerted Nigerians to the fact that platforms such as CBEX, Silverkuun, and TOFRO were operating illegally by advertising AI-powered trading systems that promise unrealistic returns. According to the commission, these platforms are not registered or regulated by the SEC, yet they continue to mislead and deceive the public with false claims of AI-driven investments. They pose serious risks to investors. Hence, the commission issued a series of disclaimers against their activities to prevent unsuspecting Nigerians from falling prey.
Although AI is a good enabler, the concern is that it is being gradually abused, which is why the SEC must quickly reveal that fraudsters are increasingly using deepfake videos and AI-generated content to lure victims. Among the strategies employed by fraudsters is the sharing of manipulated videos featuring politicians, celebrities, and TV hosts through Facebook ads, Instagram Reels, and Telegram groups, which gives fraudulent platforms a semblance of credibility.
The scammers are also exploiting AI to fabricate endorsements and testimonials that appear genuine. This has rendered traditional fraud detection methods less effective, underscoring the need for tech-enabled regulation and increased public awareness. It is reassuring that the SEC is taking steps to counter scams by implementing advanced surveillance systems that can detect fraudulent activity in real-time. Partnerships with the Central Bank of Nigeria (CBN) and the Nigerian Financial Intelligence Unit (NFIU) are already being strengthened to facilitate data sharing and joint enforcement actions.
Indeed, the rise of deepfake endorsements and AI-driven Ponzi schemes poses an existential threat to retail investor trust and the integrity of Nigeria’s rapidly digitising capital market. Indeed, fraudsters have long excelled at social engineering, but it is particularly disturbing that AI has given them a catastrophic upgrade.
The SEC’s warning highlighted the insidious nature of these new scams. Scammers are now leveraging Generative AI to create hyper-realistic videos and audio clips of celebrities, public figures, and even financial experts, all falsely endorsing fraudulent investment platforms.
These deepfakes are virtually indistinguishable from genuine content, weaponising the trust Nigerians place in familiar faces. They are aggressively marketed across social media platforms like Facebook, Instagram, and Telegram, creating a sophisticated veneer of legitimacy for old, discredited Ponzi schemes.
It has been observed that the current buzz around AI has become the latest marketing bait for classic Ponzi schemes. Fraudsters are rebranding them as either “AI-powered crypto arbitrage”, “machine learning wealth platforms” or “algorithmic trading systems.” The illusion is that a complex, high-tech algorithm guarantees phenomenal, risk-free returns, a promise that is the oldest and clearest red flag of fraud. The success of these scams is built on exploiting the average Nigerian investor’s twin vulnerabilities: a lack of technical literacy regarding deepfakes and a desperation for high, quick returns in a challenging economic climate.
The use of AI-generated testimonials creates an immediate emotional and cognitive bypass, making victims trust platforms that offer returns far above the national inflation rate. The consequence is not just the immediate financial loss but the erosion of public confidence in legitimate digital investment channels, which are vital for a modern economy.
The Nigerian financial market is at a critical inflection point. The traditional regulatory playbook – verifying paper trails and physical addresses – is no longer effective against this invisible, borderless threat. Therefore, the SEC, in collaboration with agencies like the CBN and the NFIU, must transition its strategy from policing entities to policing data and deception.
The reported move by the SEC to adopt an advanced AI surveillance system is a necessary defensive step. This technology must be robust enough to scan digital platforms, identify patterns indicative of AI-generated content promoting unlicensed schemes, and trigger immediate take-down requests with social media platforms.
Also, the SEC should enforce its existing rules on Robo-Advisory Services and Virtual Assets to ensure that all claims of “algorithmic returns” are vetted for legitimacy.
The Commission’s warning to social media influencers promoting unlicensed platforms is timely but requires concrete action. Any individual or entity that lends credibility to these scams, whether through payment or negligence, must face swift regulatory sanctions and prosecution. This will sever a critical link in the scammer’s deception chain. Because no amount of regulation can fully protect a digitally illiterate population, the regulators must spearhead a national campaign focused on AI literacy, explicitly teaching investors how to spot deepfake indicators.
The fight against AI-driven financial fraud cannot be won by the regulator alone. It demands a collective effort. For instance, Social Media platforms must take on the moral and regulatory burden of policing their advertising ecosystems, implementing AI-driven verification for paid financial content and acting immediately on regulatory take-down requests. Financial institutions must upgrade their security systems to incorporate sophisticated liveness detection and deepfake-blocking biometrics to prevent AI-cloned voices or faces from being used in account takeover attempts. The investor must always cross-reference investment platforms on the official SEC website and treat any unsolicited, high-pressure, or celebrity-endorsed financial pitch with extreme caution.
The age of AI is here, bringing with it immense potential and also immense peril. Beyond the surface of the warning, it is a declaration of a digital war on consumer savings. Nigeria must adapt its regulatory muscle and its public awareness efforts to match the sophistication of its new artificial intelligence adversary, or risk sacrificing its hard-won financial inclusion gains to this menace.
