From MMM to CBEX: Why We Keep Falling for the Same Scam
In a country teeming with entrepreneurial spirit and resourcefulness, it’s troubling how often Nigerians fall prey to financial traps wrapped in new packaging. The latest among them, CBEX, promised wealth and delivered disaster. Before it all crumbled, thousands believed in its dream of high crypto returns. But like MMM before it, the dream quickly turned into a nightmare.
CBEX operated with the same method that has fooled people for decades paying earlier investors with the money from new ones. At its height, it reportedly managed over ₦1 billion, attracting thousands with guarantees of 15% returns in one year or 35% in five. And then, as suddenly as it had risen, it vanished, leaving shattered savings and broken trust in its wake.
The Root of the Problem: Greed and Desperation
It’s easy to blame the scammers, but part of the responsibility lies within society that enables such schemes to thrive. The allure of quick money, combined with economic pressure, makes the average person vulnerable. People are not investing but gambling with their future, hoping for a lifeline.
Greed, ignorance, and a lack of financial education are key drivers. In many cases, even the educated fall victim, not because they don’t know the risks, but because the fear of missing out overshadows reason. Desperation amplifies the appeal of impossibly high returns, especially when someone nearby testifies to getting paid.
How Ponzi Schemes Damage the Economy
The fallout from Ponzi schemes extends beyond the victims. They weaken the national economy by disrupting trust in legitimate financial institutions and businesses. When citizens and investors lose confidence in the system, capital flow shrinks. People avoid investing, fearing loss, and instead keep money idle in bank accounts. As a result, economic growth slows down due to underinvestment in productive sectors.
These schemes distort the investment landscape, diverting funds from agriculture, real estate, manufacturing, and other industries that could genuinely grow the economy. They foster a culture of gambling over building and reward deceit over innovation.
When such collapses become common, they create an unstable financial environment. This fragility discourages both local and foreign investment, making the country appear high-risk to legitimate investors. In the long run, the economic consequences ripple across sectors, creating a domino effect that can take years to reverse.
The Diaspora’s Trust is at Risk
The Nigerian diaspora is one of the country’s strongest financial backbones, remitting over $20 billion annually. Many of them seek to invest back home not just for profit, but to connect with their roots and contribute to development. However, repeated cases of failed investment schemes, especially in property, agriculture, and crypto, are eroding that trust.
Imagine working and saving for years abroad, only to be defrauded by a company promising 40% returns on real estate or 50% profit from a farm you never see. These stories are becoming common, and they paint a troubling picture for anyone looking at Nigeria from outside. They feed a narrative that investing in Nigeria is a risk not worth taking, which damages the nation’s image and weakens its capacity to attract diaspora capital.
The Global Perspective: Even the Mighty Can Fall
It’s important to recognize that financial fraud is not exclusive to Nigeria. In the United States, Sam Bankman-Fried, once a crypto billionaire and founder of the popular exchange FTX, was sentenced to 25 years in prison for defrauding hundreds of thousands of customers. His platform, once considered legitimate, collapsed into scandal, shaking confidence in crypto markets worldwide.
This highlights that fraud thrives in opaque environments, digital or traditional when regulation is weak, and investors let down their guard. Nigeria is not uniquely corrupt or gullible, but it must act faster and smarter to protect its people from preventable financial disasters.
Cryptocurrency, Forex Trading, and Digital Mirage
Cryptocurrency and forex trading are among the most misunderstood yet most hyped financial markets in Nigeria today. While there are legitimate platforms, Ponzi schemes have hijacked the popularity of crypto to dupe unsuspecting Nigerians. Schemes like CBEX often disguise themselves as blockchain projects or trading platforms, making bold claims of doubling money in weeks through automated trading bots or ‘smart contracts.
These schemes exploit the fact that many Nigerians are unfamiliar with how crypto, and forex truly work. Terms like ‘Bitcoin mining’, ‘forex leverage’, and ‘NFT staking’ are thrown around to confuse and impress. But behind the curtain, there’s often no trading or mining just money moving from one victim to the next. The government must update regulations to address this rapidly evolving space or risk more economic damage.
The Hidden Threat of Loan Sharks Masquerading as Helpers
Loan sharks are another form of financial exploitation that thrives in times of economic hardship. They often operate online or through informal groups, offering quick cash without collateral but at impossibly high-interest rates. When repayment becomes difficult, they harass borrowers through public shame, threats, and even violence.
These exploitative lenders damage the economy by trapping people in cycles of debt, making it difficult for them to save, invest, or build any financial stability. Loan sharks should not be confused with microfinance banks or credit unions, which are licensed and regulated. The government must crack down on these operations, especially those that prey on vulnerable communities and the unbanked.
The Illusion of Quick Wealth
Across sectors like property and agriculture, companies are sprouting up promising outsized returns. From 15% to 40% in a year, the numbers sound too good to be true and usually are. While a few may pay in the early days, the model is often unsustainable. When inflows slow down, these firms crumble, leaving investors with nothing.
Even agricultural schemes, once seen as safe bets, have been tainted. Fake agri-tech companies collect millions from the public, show photos of non-existent farms, and vanish. This hurts not just the victims but the genuine players in the sector who now struggle to gain trust or attract funding.
The same applies to real estate, where land flipping and property sales are repackaged as investment schemes, promising high annual returns. When markets stall or deals fall through, investors are left without returns and without recourse.
Are the Regulators Sleeping?
Nigeria has regulatory agencies like the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), and the Economic and Financial Crimes Commission (EFCC), all tasked with protecting the financial system. However, many of these schemes operate in spaces too fast or too unregulated for traditional oversight especially in the digital and crypto sectors.
These gaps need to be closed. Financial surveillance systems must evolve to cover fintech, crypto, and online investment platforms. More importantly, enforcement must be swift, transparent, and public, to serve as a deterrent. Public education campaigns should be part of the government’s response teaching citizens how to identify fraud, report it, and protect their finances.
Trust Takes Time, But Fraud Destroys It Overnight
The story of GTBank is a lesson in patience and credibility. The bank reached a ₦1 trillion market capitalization through decades of transparency, service, and regulatory compliance. CBEX, in contrast, hit ₦1 billion in months without any real foundation. One grew through trust. The other grew through deceit.
If Nigeria wants to be a safe destination for investment both for its citizens and its diaspora, it must build trust deliberately and protect it fiercely. Every fraudulent scheme that succeeds sends a signal to the world that investing in Nigeria is unsafe. That perception must change.
Avoiding the Next CBEX: A Call for Vigilance
CBEX has left behind a painful lesson. To avoid future disasters, investors must ask the hard questions: Is this platform registered with the SEC? Can they clearly explain how profits are made? Are the returns realistic? Regulatory agencies must move faster to identify and shut down fraudulent platforms. Education is key citizens need to understand that no legitimate investment guarantees huge profits without risk. And the government must launch awareness campaigns to alert the public and especially the diaspora, whose remittances are often targeted. Financial stability cannot grow in the same soil as financial fraud. Nigeria must weed out Ponzi schemes, not only for the safety of today’s investors but for the future of its economy.
Reclaiming Confidence in the Economy
To restore faith in Nigeria’s investment landscape, the government must take stronger steps to regulate, prosecute, and prevent Ponzi operations. Financial literacy must become part of the national conversation, embedded in our schools, workplaces, and communities.
Investors, too, must be more discerning. If an opportunity cannot clearly explain how money is made, it’s best to be left alone. Investment should be based on value, not vibes.
There is no shortcut to sustainable wealth, only consistent effort, strategic planning, and transparency. That is the path Nigeria must walk if it hopes to build a stable, inclusive, and investor-friendly economy.
. Contributed by Deji Nehan – Diaspora Diary
The vision is to contribute to the development of Nigeria by leveraging the insights and experiences of the diaspora community. We aim to create a platform where knowledge and ideas can be shared freely, fostering a collaborative environment that drives progress and innovation. Our mission is to provide thought-provoking and actionable insights that can help shape policies, guide investments, and ultimately contribute to building a better future for Nigeria.
