The Economic and Financial Crimes Commission (EFCC) and the Securities and Exchange Commission (SEC) has vowed to track down and punish the brains behind different Ponzi schemes in Nigeria, as they should.
However, while we rely on commissions set up by the government to combat and reduce crimes in the country, we must try, as citizens, to avoid falling into financial traps that can be easily avoided.
Just last year, CBEX launched in Nigeria and branded itself as a crypto trading platform powered by AI to aid the buying and selling of digital assets by users who end up earning monthly returns of 100%. Of course, several Nigerians saw it as a get-rich-quick route that could not be ignored, but they must’ve been biting their nails when CBEX locked them out of their accounts and disappeared with their investments.
As usual, the expected social media outrage happened, but all that did was shed more light on the latest financial loss for careless investors, it didn’t bring their money back.
The summary of the above is simple: Ponzi schemes will always be a form of investment fraud that constantly targets unsuspecting investors. The basic principle behind these schemes is – rob Peter to pay Paul. Meaning, rather than generating profits, returns paid to investors actually come from the cash contributed by new investors.
The brains behind CBEX simply maintained a steady money flow by using the initial returns to lure more Nigerians in, and the evil plan was mainly to depend on new investors to pay returns to the ones who joined early. These scammers thrive on the constant inflow of fresh capital while creating the illusion of profitability; therefore, as long as fresh members keep rushing in and older investors don’t cash out completely, the deceit continues.
As an investor, never forget that every investment is risky, and the ones that guarantee unusually high returns pose a higher risk. Let’s help you do your due diligence to avoid stories that touch:
Investment Scam Signs To Take Note Of:
1. Unrealistic Goals:
Any Ponzi scheme promising guaranteed returns regardless of unsteady market conditions should not be taken seriously. Even real investments fluctuate from time to time.
2. Lack Of Regulation:
Most Ponzi schemes operate with investments that are unregulated by the government, particularly the Securities and Exchange Commission, and such a lack of proper structure is a recipe for disaster.
3. Lack Of Clarity:
Illegal schemes mostly use a vague business model to deceive unsuspecting investors. A legit investment opportunity must be transparent enough to earn your trust. If a proposal is unclear or complicated to understand, it is most likely too good to be true.
4. Suspicious Documentation:
Most Ponzi schemes lack legit paperwork. If any paperwork is presented at all, they are most likely fake but made to look real. A real investment opportunity should guarantee clear and legitimate documentation to fully assure investors.
How To Avoid Falling Prey To Ponzi Schemes In 2025:
To ensure you don’t fall victim to investment scams henceforth, always learn to spot the red flags early enough to pull out, so you can preserve your hard-earned finances. Be aware that the opportunities that promise unreasonably high returns with very minimal/zero risk are unrealistic and must be avoided completely.
Remain cautious and familiarise yourself with how legitimate investing works by constantly doing your own thorough research before parting with your precious funds.
Also do well to search the names of potential investment companies alongside keywords like “scam,” “complaint,” or “fraud” to confirm if you’re dealing with the right people/company or not.
You can verify if an investment is legit by checking the SEC Nigeria database or reaching out to them directly to ask vital questions. Also, review the company’s financial statements and disclosures to ascertain if investing your money is wise.
Finally, if you’re an older citizen with pensions or retirement savings, you must be extremely careful with the investment offers you trust with such hard-earned amounts. Ask questions, make findings, do your due diligence, research thoroughly, else everything you’ve worked for all your life might end up in the wrong hands.
