Ponzi schemes have become synonymous with deceitful investment operations. It entices individuals to invest under false pretences, promising high returns with little risk. But, in actual fact, there’s no business activity. They operate by bringing in new investors with offers to pay off old ones. Such offers usually look too good to be true, and that’s exactly what it is. Isioma Madike, who has been following the CBEX debacle, the latest in a series of Ponzi schemes, reports.
The Ponzi schemes did not creep in like a thief. There have been several of them operating with different names but with the same motive. Perhaps, the most notorious, however, is the Mavrodi Mondial Movement (MMM), which was so attractive but crashed in 2018.
They are designed to rip off their victims. Like the MMM, it was surprising for many to learn that many Nigerians still fell for the lure of CBEX, the latest digital asset trading platform that just crashed.
Little did many victims know that the operators of the platform had carted away an estimated N1.3 trillion from depositors’ wallets.
Since Monday when the crash became obvious, there have been uncontrollable weeping and regrets by many who may have been driven into it by sheer greed. But, will they learn from this?
Victims borrowed, suffered stroke
A female victim, who was identified only as Joke, is in her late 30s. She was introduced to CBEX late last year.
According to her husband, she invested approximately N22 million in total. Her initial investments were between N3 million and N4 million, and she was reportedly getting about a 30 per cent return on investment.
Encouraged by the returns, she decided to put in more money. She took loans and gathered funds until her total investment reached around N22 million, expecting to make about N30 to N40 million in returns.
The distraught husband recalled: “Just when the news broke that CBEX had crashed, she made frantic efforts to contact some of her friends. They confirmed the crash, and shortly after, she collapsed.
“We had to rush her to the University College Hospital (UCH), Ibadan, where she is currently receiving treatment. Sadly, she has suffered a stroke and can barely move her left leg and hand, but the doctors are still giving us hope.”
Joke’s case is just one.
Siju, in her early 40s, invested heavily—around N30 million, according to those in the know. Just as the news of the crash filtered in, Siju instantly contemplated dying by suicide. Ade, who introduced himself as Siju’s younger brother, told this reporter that she has lost her memory as well as suffering a stroke.
“My sister is currently receiving treatment in a hospital in Gbagada, Lagos. I have spoken with her husband, and they are doing their best to stabilise her condition. She reportedly took a loan from LAPO (Lift Above Poverty Organisation), and was fully aware of the consequences of defaulting on a loan from LAPO,” he said.
Some are silently grieving their loss while others have no idea how to recover.
Chukwudi, who invested his elder brother’s money, sent from Germany for the building of his personal house in the village, recounted his sordid experience to Saturday Telegraph.
He was first thrown into panic on Friday evening when the withdrawal button was disabled, making him unable to withdraw his funds.
He said: “I called a friend, who also has an account on the platform to confirm if I was the only one unable to withdraw. His response was not encouraging.
“‘It’s the same thing here but I just heard that the operators are updating their system and that it will be resolved soon’, he had said over the telephone.
“By Monday, it had become clear that the problem was more than what the system could just resolve. Almost immediately, rumour started flying around that wallets were displaying zero.
That was a red flag for me because I was once a victim of another Ponzi scheme before now.
“But, I received the greatest shock of my life on Monday evening when I discovered that there was no money in my digital wallet; by then it was only showing zero zero.
“I then realised in a most excruciating way that I had squandered my brother’s $3,500. I still believe I am dreaming because it’s not something I can explain.”
Another victim, who gave his name only as Adewale, said: “I joined in February with $2,400 investments, and now I’m confused because I got that money from a loan I collected with the help of a friend. How do I now pay back?
“My wife was my undoing; her greed pushed me into it. She advised me to take advantage of the huge returns on investment and invest in CBEX. I did it; see where it landed me today. I now realise how foolish I have been.”
A popular Ibadan-born Fuji musician, Taye Currency, has also disclosed how he lost N10 million, which he invested in the scheme. During a stage performance, he revealed that some friends introduced the scheme to him on April 1, and he invested N10 million from his insurance account into it.
Another Ibadan-based Electrician, who preferred to be anonymous, said that he lost N500,000 into the scheme.
He said: “I intended to invest N2m in CBEX but my wife prevailed on me and even threatened the CBEX people that she would sue them if anything untoward happened to my money. I went behind her and invested the money.
“As if she knew something unpleasant will happen, I have lost N500,000 now. I’m seriously depressed”, he said.
Yet, an online business lady, who identified herself only as Lizzy, subscribed into the scheme. She lost $1,000 in the process.
In her confession, she said: “My money don move too o. This is real wahala. I don’t know where to start again now.
“I started with N200,000 and it started growing in returns. I continued to re-invest till it grew to $1,000. I was expecting to collect the next one when it crashed.”
Greed, get rich quick drive Ponzi schemes -Ogubunka
President, Bank Customers Association of Nigeria told Saturday Telegraph that greed, get rich quick syndrome drive Ponzi schemes in Nigeria.
He said because of these things, people don’t want to do their due diligence before investing their funds.
He said: “They want to get everything at the same time. Once it is a Ponzi programme, it will surely crash somewhere along the line whether we like it or not.
“If you are going to invest money in anything you have to first of all look at the sustainability of the business. If it doesn’t show signs of sustainability then you don’t have any business going into it.
“Those who patronise such institutions are those who think they can get rich quicker than others. They flaunt whatever they have made to show that they have arrived and in the process they get caught; they harm themselves and they have no person to blame but themselves.
“I don’t know if we should be blaming the relevant government agencies which ought to be responsible for checks and balances in the financial sector, especially if they didn’t give a nod to the institution. Do you foresee a situation where, for instance, CBN approved that kind of business? If they did then they should be able to supervise what they are doing.
“None of the regulatory bodies gave a nod to them and then people joined them. You can’t blame the regulatory bodies.
“Where you can blame them is if they gave a nod and approved that such business should be in place and then they failed to supervise what they are doing. That’s my opinion.
“How many people brought the existence of this institution to the attention of the regulators? It’s only when they get to know that they can start to interrogate and find out what is going on and they will be able to say either you step down or you close up.
“I can’t confirm that someone brought this to the attention of the regulators or ministry.
“It is possible that someone or some of them may have patronised such institutions, who knows but someone has to throw it up and say this is what is happening somewhere. There is weakness everywhere.
“All of us tend to pretend that we are not part of the system but we are part of the system and we should all collectively take the blame, especially those who were aware of what was going on and didn’t report to the authorities.
“To say this magnitude of transactions is going on here; do the people have the authorisation to do this, who is keeping an oversight over what they are doing? That is it, especially those of you in the media.”
Another investment banker, who craved anonymity, told this reporter that it is just a mere waste of time talking about people who, because of idiocy, have decided to hang themselves.
“If you look at what is happening on social media you will see how many Ponzi schemes have crashed. We keep going back to the same thing every time. People want to hang themselves and you hold them but if they are not ready to listen you allow them to go.
“Every year in Nigeria they are holding them but they keep going. I’ve been in investment banking for years. I’ve decided that I don’t want to comment on it again. I’ve heard about people investing in Ponzi schemes multiple times and by now people should know how it works.
“The regulation is very clear. My thinking is that there should be some level of self-restraint. We can’t just police everybody,” he said.
‘Systemic failure, poverty, unemployment drifting Nigerians to Ponzi schemes’
The private sector group has blamed failure of regulatory authorities in the country’s financial institution for not beaming their searchlights as critical watchdogs in monitoring the various unregistered Ponzi schemes operating in the country.
According to them, “This is the time for radical decisions to be taken to address various challenges facing the nation at the moment by the Federal Government and policymakers to achieve a ‘true Nigerian State’.
“This is necessary if we get rigid of influx of unregistered Ponzi schemes that are targeting unsuspecting Nigerians at this point in time of hardship.”
An industrialist, Chief (Dr) John Agboola Odeyemi, said that poverty, greed, unemployment and other social vices in the society are causing many Nigerians to be brainwashed.
Odeyemi told one of our reporters that people are gullible. It is easy to introduce quick money making ventures by fraudsters operating unregistered Ponzi schemes in the country with the assurances to make people rich overnight.
He noted that the only proffered solution to this menace is massive job creation for Nigerian teeming youths in the country at the moment.
The rising unemployment rate in the country and poverty, he said, are the reasons why unsuspecting Nigerians are being duped of their hard earned money by fraudsters who lure them to patronise quick money making business ventures.
He said: “If there is massive employment, there will be no idle hands; if there is employment, there will be peace and people would be happy in their different homes.
“We now have about more than 30 million people in Nigeria without jobs. Also, parents do not have work to do and they cannot take care of themselves how much more their children. The acid test now, in my opinion, is let us go back to public works.
“It is not about creating 20,000 or 30,000 jobs, it is more than that. Even if it will cause inflation, then let there be work and let there be peace in the land.”
Also, the former President of Lagos Chamber of Commerce and Industry (LCCI), Babatunde Ruwase, said that the report that about N1.3 million funds belonging to Nigerians have been trapped in CBEX Ponzi scheme is a cause for alarm.
“It shows that Nigeria is currently sitting on a keg of gunpowder as concern over youths’ restiveness caused by unemployment is escalating in the society at the moment.
“Our youth are restive. And they are restive because they have no skill. They have no empowerment. They have no employment. We are all sitting on a keg of gunpowder. And my prayer is that we will do the right thing before it’s too late,” he warned.
Director-General of LCCI, Dr Chinyere Almona, also said that the chamber and others in the country’s business community are concerned about the unintended negative impact the CBEX protests are causing.
She added that the situation could have a negative effect on businesses and society at this period of economic quagmire in the country.
Schemes unrealistic -Clerics
Bishop Steven Ogedengbe, founder and head of Evangelical Ministries (Wisdom Chapel), located in Shasha, Lagos, while reacting to the CBEX crash, said that this is not the first time things like this will be happening in the house of God.
He was reacting to stories of many Christians engaging in Ponzi schemes.
Ogedengbe, who likened the scheme to money doubling and wonder banks, said that Jesus Christ had beaten up money doublers in His days. “The money doublers are those who were selling gold, soothsayers and those who were doing franchise in the house of God.
“The house of God is for evangelism and for salvation. People who are in this attitude and this transaction, they are looking for magic, not miracle.
“So, if you want to be rich, you have to be rich in the Lord and by the grace of God, through hard work and through prayer and genuine transaction.
“Ponzi schemes are unrealistic profits and gains. The arithmetic is simple: it uses the money of A to pay B and B to pay C and C may not even get his or her own money eventually. It is manipulation and distraction. It’s making our nation lazier.
Also, an Islamic scholar, Prof. Ishaq Akintola, said that Islam abhors gambling.
“It’s not allowed. Islam says, verily indeed, it’s intoxicant; gambling is Haram, that is forbidden. The Quran says therefore, stay away from them, from alcohol, from gambling, from game of chance and this is a game of chance.
“In Ponzi schemes, you put in your money, you don’t do nothing, you just sit down and expect some money to roll in. I think it’s something greedy elements in society show interest in.
“It is very easy to deceive Nigerians because they are always interested in what is cheap,” he further said.
CBEX not registered by us –SEC
The Securities and Exchange Commission has stated that Crypto Bridge Exchange also known as CBEX was not granted registration by the Commission at any time to operate as a Digital Assets Exchange.
In a Circular dated April 17, the Commission stated that its attention has been drawn to recent media reports/publications on the activities of CBEX (Crypto Bridge Exchange).
CBEX, which also operates under the corporate identity of ST Technologies International Ltd, Smart Treasure/Super Technology, has held itself out as a digital asset-trading platform, offering high returns to investors in Nigeria.
According to the SEC, “The Commission hereby clarifies that neither CBEX nor its affiliates were granted registration by the Commission at any time to operate as a Digital Assets Exchange, solicit investments from the public or perform any other function within the Nigerian capital market.
“Preliminary investigations carried out by the Commission have revealed that CBEX engaged in promotional activities to create a false perception of legitimacy, in order to entice unsuspecting members of the public into investing monies, with the promise of implausibly high guaranteed returns within a short timeframe.”
•Source: Saturday Telegraph
