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IOL News
2 days ago
- Business
- IOL News
CBEX Crypto Scam: Africa's AI-Hyped Ponzi Nightmare and the Urgent Call for Real Regulation
Logos of different cryptocurrencies are displayed during the Token2049 conference in Dubai. Beneath the glittering promises of the cryptocurrency world, where AI hype shines brightest, lies a sinister truth: CryptoBridge Exchange (CBEX). This AI-powered Ponzi scheme has shattered and embittered countless African investors. Edwin, a Kenyan government worker, is just one of many victims, having lost $16,000—borrowed money, shattered dreams, and bruised dignity. His isolated story is a symptom of a broader crisis: a digital swindle spreading unchecked across Africa's vulnerable investment landscape. CBEX initially presented an enticing opportunity: an AI trading system guaranteeing monthly returns and attractive referral bonuses. Its appearance of legitimacy was crafted through a complex network of corporate identities and fraudulent certificates. The platform employed "brandjacking," using the acronym of China's Beijing Equity Exchange, a deceptive tactic designed to instill a false sense of security in investors. The unfortunate reality is that these schemes exploit both the lack of technological awareness and the financial aspirations of ordinary Africans seeking to improve their economic standing. The Anatomy of a Modern Ponzi Scheme Africa is no stranger to Ponzi schemes, but CBEX marks a disturbing new phase: the combination of cryptocurrency's lack of transparency with the enticing appeal of artificial intelligence. Crypto scams globally siphoned off an estimated $9.9 billion last year alone, according to blockchain analysis firm Chainalysis—a staggering sum that underscores the profitability and prevalence of these fraudulent activities. CBEX operated a sophisticated, yet classic, Ponzi scheme. Investors observed fabricated "growth" in their accounts, while their actual investments were covertly drained. These funds were funneled through intricate TRON blockchain transactions, distributed across numerous wallets, and converted into various cryptocurrencies to obscure their origin. This digital illusion led investors to believe their capital was expanding, even as it was silently pilfered. Such schemes flourish where financial regulation is lax and populations are financially desperate. CBEX exploited these vulnerabilities in Kenya and Nigeria, its primary operational hubs. Large segments of the populations in these countries are financially underserved, lack financial literacy, and are keen for alternative income. CBEX capitalized on these gaps by inundating messaging apps like Telegram with alluring, yet ultimately unrealistic, promises. Why Africa? Why Now? With a burgeoning youth population, over 60% of whom are under 25 according to a 2023 African Development Bank report, Africa is seeing its young people increasingly embrace cryptocurrency. This adoption is driven by the desire for economic opportunity amidst limited formal employment and unstable local currencies, reflecting a growing demand for digital financial solutions. The rapid adoption of cryptocurrency in Africa has unfortunately outpaced the implementation of adequate safeguards, leading to a precarious situation. Instead of proactive measures, governments have largely reacted after the fact. For instance, Kenya's Capital Markets Authority only issued investor alerts once significant harm had already occurred, and Nigeria's EFCC has been compelled to reactively pursue scammers and recover funds. These isolated responses are insufficient for a crisis that urgently requires a holistic and forward-looking regulatory framework. CBEX's acquisition of an anti-money laundering certificate—even if only for consultancy services—highlights a concerning blend of scammer ingenuity and institutional oversight. This loophole in governmental and institutional diligence emboldens fraudsters, who expertly exploit bureaucratic gaps and insufficient cross-border regulatory collaboration. What Must Be Done? The Imperative for Stronger Regulation and Education African governments need to abandon their current reactive and fragmented regulatory approach. While Nigeria's new Investments and Securities Act, which criminalises Ponzi schemes, is a welcome development, robust and immediate enforcement, coupled with enhanced cross-border collaboration, is crucial. Warnings and investor alerts from regulators are no longer sufficient. There's a pressing need for dedicated crypto regulatory bodies. These bodies must be equipped to comprehend and supervise digital asset markets, with the authority to vet platforms, enforce transparency, and implement stringent Know-Your-Customer (KYC) protocols. Public education on crypto risks is crucial and should be integrated into financial literacy initiatives. Many are drawn to the allure of "guaranteed returns" from AI-powered trading bots, often unaware of the volatile and speculative nature of digital assets. Governments, NGOs, and community organizations should collaborate to provide clear and accessible information on identifying scams. Telegram and other similar technology platforms need to enhance their scam-detection systems. While Telegram has started to ban problematic users and identify scam groups, CBEX's ongoing activity on the platform underscores the critical need for more proactive surveillance and collaboration with law enforcement. Closing Thoughts: Never Again For victims such as Edwin and Abby, "never again" is more than a personal promise; it's a demand for systemic change. While the CBEX scandal may account for billions lost worldwide and millions domestically, the real price is the erosion of hope and the shattering of trust. This cannot be Africa's crypto epitaph. Rather, it must be the point at which we declare an end to hollow pledges and AI fantasies. The urgent need for responsible regulation, investor education, and institutional responsibility is upon us—before another CBEX rises from the depths, poised to exploit aspirations once more. By Sesona Mdlokovana UAE & African Specialist Associate at the BRICS+ Consulting Group ** MORE ARTICLES ON OUR WEBSITE ** Follow @brics_daily on X/Twitter & @brics_daily on Instagram for daily BRICS+ updates
Yahoo
11-06-2025
- Business
- Yahoo
‘I invested in a Ponzi scheme': Nigerians fall victim to crypto scams
Lagos, Nigeria — Mandela Fadahunsi, who works at a technical training school in Ikeja in Nigeria's Lagos, never believed he could fall victim to a Ponzi scheme. On April 6, the 26-year-old was starting his day when a WhatsApp notification lit up his phone screen. Someone on the group chat for investors of the cryptocurrency investment platform, Crypto Bridge Exchange (CBEX), had tried and failed to withdraw some funds, so they wanted to confirm if it was a general issue. Fadahunsi quickly logged on to his digital wallet and tried to withdraw 500 USDT, a cryptocurrency that stands for United States Dollar Tether, or simply Tether. But 24 hours later, a process that should have taken just 10 minutes was yet to complete. He knew then that something had gone wrong. He started to panic, but half-hoped it was just a glitch or a minor system error. 'They [CBEX administrators] said it was as a result of the excessive volume of people trying to withdraw, and that all withdrawals have been placed on hold until 15th of April,' Fadahunsi told Al Jazeera. On the 15th, he and fellow investors waited but heard nothing. On subsequent days, the administrators gave more excuses until the site stopped working altogether, and everyone's money disappeared without a trace. That is when he realised he had been scammed and might never be able to recover the 4,596 USDT stablecoin in his wallet. While Fadahunsi tallied his losses, the issue went viral on social media platforms. Many more Nigerians shared their stories of loss, while others mocked them for losing their money to scammers. Some members of the public, filled with rage, attacked and ransacked CBEX offices in Ibadan and Lagos. CBEX launched operations in Nigeria in July 2024, claiming to be able to generate immense trading profits using generative artificial intelligence. By January, it had gained serious popularity through referrals and smart advertising. Fadahunsi and thousands of other people invested with the hope of making a maximum profit – the scheme promised up to 100 percent return on investment after a 40- to 45-day maturation period. At the start, the scheme did pay out, and the testimonies of successful initial investors attracted more people to sign up. But after nine months of operation, the music stopped as the platform made away with an estimated 1.3 trillion naira ($840m), according to the official Nigerian Financial Intelligence Unit (NFIU). It left investors stunned. Nigeria's anticorruption agency, the Economic and Financial Crimes Commission (EFCC), has since labelled CBEX a Ponzi scheme. Experts say the organisers of such scams usually promise to invest people's money in something that generates high returns, but in reality, it is investment fraud that pays existing investors with funds collected from new ones. Once a large number of people cash out, and new investors into the scheme dry up, it collapses. Ponzi schemes, including CBEX, are usually not backed by any discernible economic activity, experts say. According to Ikemesit Effiong, from the Lagos-based socioeconomic advisory firm, SBM Intelligence, most times these businesses do not have anything to sell and have no recognisable business models. Even the agriculture-based ones claim to have products that investigators are unable to track. They also largely rely on existing investors to bring in new investors who serve as their downlink in the pyramid scheme. Experts say that in Nigeria, widespread financial illiteracy, lax regulations, greed, economic hardship and peer pressure make investors susceptible to the machinations of Ponzi organisations that combine aggressive advertising, word-of-mouth campaigns charged by incentives, and initial high returns. But at the end, the schemes leave victims – many of whom invest their savings, business capital, and borrowed money – unable to do anything but watch their hard-earned money disappear. Fadahunsi first heard about the CBEX scheme from colleagues at the start of the year. Initially, he was hesitant. But a few days later, his neighbour also mentioned the platform. Recognising that his close associates were participating, and not wanting to miss out, he decided to invest. 'I also thought the money was just sitting in my account, and it could be somewhere where I can make some gains on my money,' he explained. In early February, he dipped into his rent savings and withdrew the entire 800,000 naira ($517). With that, he bought 500 USDT from the crypto exchange platform Buybit, receiving the coin in his digital CBEX wallet. Four times a day on the CBEX platform, administrators dropped a code, which they call a 'signal'. Investors were required to copy and paste the code into a section of their portal within the hour. CBEX said AI would then use that to make a trade, basically to buy and sell or change positions in such a way that it made a profit from price fluctuations on the investors' behalf. Each time Fadahunsi pasted in the code, he would get 4.7 to 5 USDT as a profit, all of which accumulated towards his returns. 'So the more you do it, the more the percentage increases. In a month, I got double of 500 USDT,' he said, adding that there were also bonuses for things like referrals. In March, users said CBEX made an adjustment where they no longer input the signal. Instead, investors just had to turn on an 'AI hosting' option at the start of the day. But some investors say this was likely just a ploy to keep them going, to convince them they were still making a profit before everything crashed in April. While some investors withdrew their returns, by the time CBEX crashed, Fadahunsi had not withdrawn any money. He had wanted to maximise the investment opportunity, to leave the funds to grow for five to six months before using them to buy a plot of land to build his future home. Now, that dream is dead. 'It is very hard, but thank God that my landlord is actually understanding,' he said. 'I am not proud of opening my mouth [to say] that I actually invested in a Ponzi scheme,' he lamented. 'If I wasn't greedy, I should have been able to withdraw two to three times on the platform, and it would have been successful.' Even before CBEX, Ponzi schemes were not new in Nigeria. In March, Nigeria's anticorruption agency published a list of 58 Ponzi schemes presently operating in the country, and advised the public to 'be vigilant and proactive'. This highlights the widespread presence of fraudulent entities masquerading as legitimate businesses in the country: in 23 years, Nigerians lost 911 billion naira ($589m) to Ponzi-related scams, the National Deposit Insurance Corporation (NDIC), which protects the country's banking system, said in 2022. Often, Ponzi schemes are able to operate by leveraging grey areas, such as obtaining an irrelevant certification that exaggerates their significance or legitimacy. CBEX, for instance, obtained the EFCC's anti-money laundering certificate through the corporate identity of ST Technologies International Ltd, and paraded it as a kind of clearance for conducting business. However, the NFIU said CBEX was never granted a registration by the Securities and Exchange Commission (SEC) to operate as a Digital Assets Exchange, solicit investments from the public or perform any other function within the Nigerian capital market. Legitimate businesses can be verified by checking the SEC website. However, experts say the vast majority of those who invest in shady schemes seem unaware or uneducated about this – 38 percent of Nigerians are financially illiterate, according to a 2023 central bank report. At the same time, other victims may be willing participants, at least at first. Joachim MacEbong, a senior analyst at Stears, a Lagos-based financial advisory firm, said while some victims are unwitting, others intentionally walk into Ponzi schemes hoping to make a quick profit before it crashes. 'There are those who know it is a scam, but they always feel they could cash out before everybody else. And so they would make that calculation, and it is largely because of the situation in the country; there is a lot of hardship. This kind of hardship increases the people's desire to take risks and gamble with their very important funds,' he explained. Nigeria's economy has been on a downward spiral for decades, and is worse now that the country is going through its toughest economic downturn in about 30 years. Food prices have soared, and basic amenities are becoming inaccessible as the inflation rate sits at 23.71 percent. Against this backdrop, some see Ponzi schemes as a fast way to break out of the vicious cycle of poverty. Like the proverbial early bird, early investors benefitted from the CBEX scheme, multiplying their returns for several months. Although social media is agog with complaints and bitter disappointment, some people said they had been able to make major purchases such as land and cars from their investment. 'The time scale at which you enter the investment will determine whether it will be a good investment or you will be a victim,' said Effiong of SBM Intelligence, but he added that many new investors are unaware of this Oyedele is one of the people who invested their savings in CBEX because of worsening financial hardship in the country. When he realised that the investment had crashed, he wept. The 25-year-old comes from a low-income family. He graduated from Obafemi Awolowo University last year, but when he could not get a job, he started working as a shoemaker. In January, he invested his savings of 800,000 naira (500 USDT); by March he had made 1,200 USDT. He gave the returns to his younger brother to reinvest to help him pay for his future university studies, and in doing so, help ease their father's financial burden. 'I felt bad [when we lost the money] because we had a lot of plans on it,' Oyedele said. 'I had a plan of buying a computer and going into UI/UX. Now it has gone.' He is deeply affected by the situation and has reduced the way he spends his tiny income as he tries to rebuild his savings for future use and to support his brother. Ponzi schemes play on psychology and human instincts by making it seem as though easy money is within reach, Effiong of SBM said. All investments involve some form of greed, Effiong explained, and the promise of ending up with a higher return is one of the most elementary forms of human motivation: we all want more and as quickly as possible. 'What [a Ponzi scheme] does is that it also unlocks the deep-seated psychological bend for human beings to join groups – the obvious fear of missing out,' he said. 'It also thrives on really aggressive marketing – all of that is to prey on the psychology of potential investors to not slow down.' Over the years, Ponzi schemes have employed several techniques to appeal to people, even going the extra mile to try and build public trust and goodwill. CBEX, for example, organised a sports competition and ran scholarships for schoolchildren to throw off suspicion, experts said. In Nigeria, schemes rely heavily on existing investors who are incentivised to introduce new investors. They also engage in aggressive marketing using local and social media, sometimes involving radio, influencers and celebrity endorsements. Afrobeats stars Davido and Rema are some of the most popular celebrities to have unknowingly endorsed and made promo videos for Ponzi schemes in the past. Ponzi schemes are also becoming increasingly sophisticated and dynamic as they leverage the latest technologies and digital tools, experts say. 'Many of them have apps with wonderful user experiences, which lend an air of credibility to their enterprise. Many of these scammers go to great lengths to design their products in such a way that they look and appear credible,' Effiong said. MacEbong from Stears agreed, saying fake news and misinformation campaigns will become supercharged using AI tools, making it easier to hoodwink unsuspecting victims. 'There are numerous examples of generative AI being used to fool people who are even well informed and more savvy. When you turn these various tools against people with much lower exposure and information, they are practically defenceless,' MacEbong explained. Regulators such as the SEC must become more proactive and come up with agile tactics to rein in Ponzi schemes and protect the public from illegitimate enterprises and shut them down before they cause harm, experts told Al Jazeera. Businesses must be registered and thoroughly vetted because Ponzi schemes have been erroneously certified in the past, Effiong emphasised. 'There has to be a lot of financial education. Financial literacy is critical, which goes beyond how to make money, but [also] to educate the public on the tell-tale signs of Ponzi schemes. The responsibility also lies with the general public to educate themselves. If it sounds too good to be true, chances are it is too good to be true,' he said. On May 26, EFCC said it had recovered a portion of the money stolen by CBEX and arrested two individuals promoting it. Al Jazeera tried to contact CBEX for comment through its website and publicly available phone numbers, but all were unavailable or out of service. Meanwhile, many investors like Fadahunsi have lost hope and believe that the money they invested is all gone. 'Whatsoever the authorities retrieve, I am sure that nothing is going to come to me; I moved on already,' he said. 'That is a very tough lesson for me. [Now,] I would rather keep my money in my account and spend it till the last dime.'
Al Jazeera
11-06-2025
- Business
- Al Jazeera
‘I invested in a Ponzi scheme': Nigerians fall victim to crypto scams
Lagos, Nigeria — Mandela Fadahunsi, who works at a technical training school in Ikeja in Nigeria's Lagos, never believed he could fall victim to a Ponzi scheme. On April 6, the 26-year-old was starting his day when a WhatsApp notification lit up his phone screen. Someone on the group chat for investors of the cryptocurrency investment platform, Crypto Bridge Exchange (CBEX), had tried and failed to withdraw some funds, so they wanted to confirm if it was a general issue. Fadahunsi quickly logged on to his digital wallet and tried to withdraw 500 USDT, a cryptocurrency that stands for United States Dollar Tether, or simply Tether. But 24 hours later, a process that should have taken just 10 minutes was yet to complete. He knew then that something had gone wrong. He started to panic, but half-hoped it was just a glitch or a minor system error. 'They [CBEX administrators] said it was as a result of the excessive volume of people trying to withdraw, and that all withdrawals have been placed on hold until 15th of April,' Fadahunsi told Al Jazeera. On the 15th, he and fellow investors waited but heard nothing. On subsequent days, the administrators gave more excuses until the site stopped working altogether, and everyone's money disappeared without a trace. That is when he realised he had been scammed and might never be able to recover the 4,596 USDT stablecoin in his wallet. While Fadahunsi tallied his losses, the issue went viral on social media platforms. Many more Nigerians shared their stories of loss, while others mocked them for losing their money to scammers. Some members of the public, filled with rage, attacked and ransacked CBEX offices in Ibadan and Lagos. CBEX launched operations in Nigeria in July 2024, claiming to be able to generate immense trading profits using generative artificial intelligence. By January, it had gained serious popularity through referrals and smart advertising. Fadahunsi and thousands of other people invested with the hope of making a maximum profit – the scheme promised up to 100 percent return on investment after a 40- to 45-day maturation period. At the start, the scheme did pay out, and the testimonies of successful initial investors attracted more people to sign up. But after nine months of operation, the music stopped as the platform made away with an estimated 1.3 trillion naira ($840m), according to the official Nigerian Financial Intelligence Unit (NFIU). It left investors stunned. Nigeria's anticorruption agency, the Economic and Financial Crimes Commission (EFCC), has since labelled CBEX a Ponzi scheme. Experts say the organisers of such scams usually promise to invest people's money in something that generates high returns, but in reality, it is investment fraud that pays existing investors with funds collected from new ones. Once a large number of people cash out, and new investors into the scheme dry up, it collapses. Ponzi schemes, including CBEX, are usually not backed by any discernible economic activity, experts say. According to Ikemesit Effiong, from the Lagos-based socioeconomic advisory firm, SBM Intelligence, most times these businesses do not have anything to sell and have no recognisable business models. Even the agriculture-based ones claim to have products that investigators are unable to track. They also largely rely on existing investors to bring in new investors who serve as their downlink in the pyramid scheme. Experts say that in Nigeria, widespread financial illiteracy, lax regulations, greed, economic hardship and peer pressure make investors susceptible to the machinations of Ponzi organisations that combine aggressive advertising, word-of-mouth campaigns charged by incentives, and initial high returns. But at the end, the schemes leave victims – many of whom invest their savings, business capital, and borrowed money – unable to do anything but watch their hard-earned money disappear. Fadahunsi first heard about the CBEX scheme from colleagues at the start of the year. Initially, he was hesitant. But a few days later, his neighbour also mentioned the platform. Recognising that his close associates were participating, and not wanting to miss out, he decided to invest. 'I also thought the money was just sitting in my account, and it could be somewhere where I can make some gains on my money,' he explained. In early February, he dipped into his rent savings and withdrew the entire 800,000 naira ($517). With that, he bought 500 USDT from the crypto exchange platform Buybit, receiving the coin in his digital CBEX wallet. Four times a day on the CBEX platform, administrators dropped a code, which they call a 'signal'. Investors were required to copy and paste the code into a section of their portal within the hour. CBEX said AI would then use that to make a trade, basically to buy and sell or change positions in such a way that it made a profit from price fluctuations on the investors' behalf. Each time Fadahunsi pasted in the code, he would get 4.7 to 5 USDT as a profit, all of which accumulated towards his returns. 'So the more you do it, the more the percentage increases. In a month, I got double of 500 USDT,' he said, adding that there were also bonuses for things like referrals. In March, users said CBEX made an adjustment where they no longer input the signal. Instead, investors just had to turn on an 'AI hosting' option at the start of the day. But some investors say this was likely just a ploy to keep them going, to convince them they were still making a profit before everything crashed in April. While some investors withdrew their returns, by the time CBEX crashed, Fadahunsi had not withdrawn any money. He had wanted to maximise the investment opportunity, to leave the funds to grow for five to six months before using them to buy a plot of land to build his future home. Now, that dream is dead. 'It is very hard, but thank God that my landlord is actually understanding,' he said. 'I am not proud of opening my mouth [to say] that I actually invested in a Ponzi scheme,' he lamented. 'If I wasn't greedy, I should have been able to withdraw two to three times on the platform, and it would have been successful.' Even before CBEX, Ponzi schemes were not new in Nigeria. In March, Nigeria's anticorruption agency published a list of 58 Ponzi schemes presently operating in the country, and advised the public to 'be vigilant and proactive'. This highlights the widespread presence of fraudulent entities masquerading as legitimate businesses in the country: in 23 years, Nigerians lost 911 billion naira ($589m) to Ponzi-related scams, the National Deposit Insurance Corporation (NDIC), which protects the country's banking system, said in 2022. Often, Ponzi schemes are able to operate by leveraging grey areas, such as obtaining an irrelevant certification that exaggerates their significance or legitimacy. CBEX, for instance, obtained the EFCC's anti-money laundering certificate through the corporate identity of ST Technologies International Ltd, and paraded it as a kind of clearance for conducting business. However, the NFIU said CBEX was never granted a registration by the Securities and Exchange Commission (SEC) to operate as a Digital Assets Exchange, solicit investments from the public or perform any other function within the Nigerian capital market. Legitimate businesses can be verified by checking the SEC website. However, experts say the vast majority of those who invest in shady schemes seem unaware or uneducated about this – 38 percent of Nigerians are financially illiterate, according to a 2023 central bank report. At the same time, other victims may be willing participants, at least at first. Joachim MacEbong, a senior analyst at Stears, a Lagos-based financial advisory firm, said while some victims are unwitting, others intentionally walk into Ponzi schemes hoping to make a quick profit before it crashes. 'There are those who know it is a scam, but they always feel they could cash out before everybody else. And so they would make that calculation, and it is largely because of the situation in the country; there is a lot of hardship. This kind of hardship increases the people's desire to take risks and gamble with their very important funds,' he explained. Nigeria's economy has been on a downward spiral for decades, and is worse now that the country is going through its toughest economic downturn in about 30 years. Food prices have soared, and basic amenities are becoming inaccessible as the inflation rate sits at 23.71 percent. Against this backdrop, some see Ponzi schemes as a fast way to break out of the vicious cycle of poverty. Like the proverbial early bird, early investors benefitted from the CBEX scheme, multiplying their returns for several months. Although social media is agog with complaints and bitter disappointment, some people said they had been able to make major purchases such as land and cars from their investment. 'The time scale at which you enter the investment will determine whether it will be a good investment or you will be a victim,' said Effiong of SBM Intelligence, but he added that many new investors are unaware of this catch. Waris Oyedele is one of the people who invested their savings in CBEX because of worsening financial hardship in the country. When he realised that the investment had crashed, he wept. The 25-year-old comes from a low-income family. He graduated from Obafemi Awolowo University last year, but when he could not get a job, he started working as a shoemaker. In January, he invested his savings of 800,000 naira (500 USDT); by March he had made 1,200 USDT. He gave the returns to his younger brother to reinvest to help him pay for his future university studies, and in doing so, help ease their father's financial burden. 'I felt bad [when we lost the money] because we had a lot of plans on it,' Oyedele said. 'I had a plan of buying a computer and going into UI/UX. Now it has gone.' He is deeply affected by the situation and has reduced the way he spends his tiny income as he tries to rebuild his savings for future use and to support his brother. Ponzi schemes play on psychology and human instincts by making it seem as though easy money is within reach, Effiong of SBM said. All investments involve some form of greed, Effiong explained, and the promise of ending up with a higher return is one of the most elementary forms of human motivation: we all want more and as quickly as possible. 'What [a Ponzi scheme] does is that it also unlocks the deep-seated psychological bend for human beings to join groups – the obvious fear of missing out,' he said. 'It also thrives on really aggressive marketing – all of that is to prey on the psychology of potential investors to not slow down.' Over the years, Ponzi schemes have employed several techniques to appeal to people, even going the extra mile to try and build public trust and goodwill. CBEX, for example, organised a sports competition and ran scholarships for schoolchildren to throw off suspicion, experts said. In Nigeria, schemes rely heavily on existing investors who are incentivised to introduce new investors. They also engage in aggressive marketing using local and social media, sometimes involving radio, influencers and celebrity endorsements. Afrobeats stars Davido and Rema are some of the most popular celebrities to have unknowingly endorsed and made promo videos for Ponzi schemes in the past. Ponzi schemes are also becoming increasingly sophisticated and dynamic as they leverage the latest technologies and digital tools, experts say. 'Many of them have apps with wonderful user experiences, which lend an air of credibility to their enterprise. Many of these scammers go to great lengths to design their products in such a way that they look and appear credible,' Effiong said. MacEbong from Stears agreed, saying fake news and misinformation campaigns will become supercharged using AI tools, making it easier to hoodwink unsuspecting victims. 'There are numerous examples of generative AI being used to fool people who are even well informed and more savvy. When you turn these various tools against people with much lower exposure and information, they are practically defenceless,' MacEbong explained. Regulators such as the SEC must become more proactive and come up with agile tactics to rein in Ponzi schemes and protect the public from illegitimate enterprises and shut them down before they cause harm, experts told Al Jazeera. Businesses must be registered and thoroughly vetted because Ponzi schemes have been erroneously certified in the past, Effiong emphasised. 'There has to be a lot of financial education. Financial literacy is critical, which goes beyond how to make money, but [also] to educate the public on the tell-tale signs of Ponzi schemes. The responsibility also lies with the general public to educate themselves. If it sounds too good to be true, chances are it is too good to be true,' he said. On May 26, EFCC said it had recovered a portion of the money stolen by CBEX and arrested two individuals promoting it. Al Jazeera tried to contact CBEX for comment through its website and publicly available phone numbers, but all were unavailable or out of service. Meanwhile, many investors like Fadahunsi have lost hope and believe that the money they invested is all gone. 'Whatsoever the authorities retrieve, I am sure that nothing is going to come to me; I moved on already,' he said. 'That is a very tough lesson for me. [Now,] I would rather keep my money in my account and spend it till the last dime.'
Coin Geek
13-05-2025
- Business
- Coin Geek
$800M CBEX scam resumes operations in Nigeria despite crackdown
Getting your Trinity Audio player ready... Two weeks ago, the Crypto Bridge Exchange (CBEX) collapsed and allegedly sank with $800 million worth of users' deposits. The Nigerian government sprang into action, pledging to pursue the operators and recover the funds. However, CBEX has quietly reopened and is now recruiting new investors with the same promises of astronomical returns, according to local reports. Repackaged deception Before it collapsed, CBEX had over 600,000 users, mainly from Nigeria, but with a presence in Kenya. It lured investors with promises of 100% returns in 30 days, claiming to generate profits through AI-powered digital currency trading strategies. However, it was all a house of cards, and when it crashed, it wiped out hundreds of millions of dollars. The Ponzi scheme is back, however. Sources told one Nigerian outlet that the platform once again allows new users to register, trade and even withdraw their profits. However, there's a catch: only the new accounts can reportedly withdraw their profits. Older accounts, which lost money when CBEX suspended withdrawals, must await 'an ongoing investigation and audit by the UK government,' which will be completed in 60 days. The operators have allegedly dismissed scam claims. They say that their AI-powered bot had a mishap and lost some of the money. They also claim that the figure has been greatly exaggerated and is closer to ₦126 billion ($78 million). 'According to the latest information shared, previous investors can only trade but not withdraw because the United Kingdom government is carrying out an audit on their financial account, which will be completed between 30 to 60 days. Hence, the reason why previous investors cannot withdraw their funds yet,' the source, whose identity was withheld, stated. However, a lot doesn't add up, such as why the platform reopened if it's under investigation by U.K. authorities or why the operators have not worked with Nigerian authorities to refund investors. When asked why the probe is not being handled by the Nigerian government, the operators stated, 'The firm is registered in the United Kingdom, not in Nigeria. They merely extended their operations here. In fact, they also have branches in Kenya, South Africa, and Egypt.' Red flags abound; according to another local outlet, CBEX demands that older investors who wish to withdraw their funds after the probe is completed must pay $100 if they hold less than $1,000, or $200 if their holdings exceed that amount. 'And we have started seeing people put in these funds to get back their money, and are using it to trade now, as I talk to you,' one operator told the outlet. Regulatory blame games As CBEX continues its deception, Nigerian authorities are engaging in blame games over who is responsible for one of the country's biggest Ponzi schemes. As we previously reported, the Securities and Exchange Commission (SEC) insisted it was not responsible since CBEX had never registered with the agency. Now, the Economic and Financial Crimes Commission (EFCC) is taking the same route, but this time, it's shifting the blame to investors. In a televised interview, the EFCC boss, Ola Olukoyede, said investors should have reported CBEX months before it collapsed. 'And you know what, when the going is good. Nobody makes noise, nobody talks. But it is when the bubble bursts that EFCC is dragged into it,' he told Channels TV. The EFCC doesn't have a 'magic wand' that can detect all the scams that Nigerians are directing their funds to, he added. 'So, we wait, most times, until the bubble bursts.' Olukoyede further described CBEX as a 'very pathetic case for Nigerians who have lost their money,' but insisted that the EFCC is unlikely to recover the lost funds. While it distanced itself from the scam, the EFCC had earlier claimed to be pursuing some of the scam operators. A week ago, the agency published the names of eight suspects—four Nigerians and four Kenyans allegedly living in Lagos—whom it says were among the top brass at the firm. The EFCC boss said it's working with Kenyan and international authorities to nab the suspects. However, history indicates that pursuing the Kenyan suspects might prove futile; when the Kenyan executive at Binance escaped detention in Abuja, the EFCC tried to pursue him in the East African nation, but Kenyan authorities were reportedly very uncooperative, and he was never arrested. Watch: Breaking down solutions to blockchain regulation hurdles title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Business Mayor
06-05-2025
- Business
- Business Mayor
‘Quick-Money' Nigerian Crypto Platform's Withdrawal Plan Met With Suspicion
The troubled Nigerian digital asset platform Crypto Bridge Exchange (CBEX) recently announced new withdrawal options in an effort to restore investor confidence. Sources revealed that the company made this announcement after facing claims of collapse. Under the new rules, investors with up to $1,000 in the platform must pay a $100 fee to withdraw 50% […] READ SOURCE
