. Loss of N1.3trn to CBEX, others in focus
By James Adamu
The Senate has passed a resolution to investigate the operations of Ponzi schemes and other online payment platforms in Nigeria which specialize in defrauding investors of their funds.
One case on the radar of the Senate is the recent crash of Crypto Bullion Exchange (CBEX).
The crash of the scheme last April saw investors losing over N1.3trillion.
Four committees of the Senate -Capital Market and Institutions; Banking, Insurance and Other Financial Institutions; Anti-Corruption and Financial Crimes; and ICT/Cyber Security -were mandated on Wednesday to conduct a comprehensive investigative hearing, including public hearings, on the operations of Ponzi schemes in Nigeria in the next four weeks.
The resolution, which was passed while the President of the Senate, Godswill Akpabio, presided over proceedings, followed a motion moved by Senator Mukhail Adetokumbo Abiru (Lagos- East) and Senator Osita Izunaso (Imo-West), drawing attention to the colossal economic pain unleashed on Nigerians by failed ponzi schemes over the years.
The Senate is “Deeply conceracd about the rapid proliferation and alarming rise of unregulated and fraudulent investment echemes -commonly known as Ponzi or pyramid schemesz such as MMM Nigeria in 2016; MBA Forex in 2020, to mention a few -which have repeatedly defrauded millions of Nigerians, causing severe financial hardship and, in some cases, driving victims to depression, family breakdowns, and even suicide.
“Notes in particular the recent case of Crypto Bullion Exchange (CBEX), a digital investment platform, which lured millions of Nigerians with the promise of outrageous returns, before suddenly collapsing and resulting in investors losing over N1.3 trillion (about $847 million), making it one of the most devastating financial scams in the country’s history.
“Alse notes that the CBEX incident is not an isolated case, but part of an existing and growing pattern of unregulated and fraudulent schemes leveraging technology, and social media to deceive the public, often using tactics such as referral commissions, celebrity endorsements, and fake testimonials to build credibility and drive recruitment”, the motion reads partly.
Abiru, while leading the debate on the motion, expressed shock that the fraudulent schemes grew rapidly in spite of the regulatory checks supposed to have been carried out on their operations by the Central Bank of Nigeria (CBN).
He also wondered how a scheme like CBEX continued to operate without facing sanctions by “either the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), the Nigerian Financial Intelligence Unit (NFIU), or the Economic and Financial Crimes Commission (EFCC).”
He noted that the development was a failure of regulatory authorities, calling on the National Assembly, as the representative of the people, to intervene by curbing such fraudulent schemes through detailed investigations.
“The lack of coordinated oversight, real-time monitoring, and strict enforcement by relevant
agencies has created an enabling environment for such schemes to flourish, eroding public trust in legitimate financial institutions and posing systemic risks to the economy”, he added.
Senate Whip, Senator Mohammed Monguno (Borno-North), while contributing to the debate, observed that the operators of Ponzi schemes took advantage of “vulnerable and gullible Nigerians to defraud them of their hard-earned money, sending some to their early graves.”
He called for stiffer legislative measures to take care of the economic threats posed by these schemes by nipping them in the bud.
Kwara State Senator, Sadiq Suleiman, urged the Senate to step in to protect Nigerians, most of whom he said were ignorant and might not be aware of the full implications of staking their scarce resources in online schemes.
“We have to continually monitor any financial scheme to protect citizens. Our agencies must wake up by carrying out their regulatory functions”, he recommended.
Chairman, Senate Committee on Appropriations, Senator Solomon Olamilekan (Ogun-West), pointed out that because of the easy returns on investment promised by the schemes and other online payment platforms, young Nigerians were among their highest investors.
“I wonder how this monumental fraud will happen when we have the regulator, the CBN. We are going to ask the CBN what regulations they put in place to prevent these scams.
“Apart from ponzi schemes, are there many other online payment platforms that defraud Nigerians
“Are we saying that Nigeria is so porous that we lose trillions of Naira just like that?”, stated.
On his part, Senator Abdul Ningi (Bauchi-Central) spoke of the motion as being “an extraordinary motion that deals with an extraordinary situation, which demands an extraordinary action.”
He noted, “We have laws in place but over the years, the ponzi schemes keep metamorphosing every now and then.
“Who are those behind the schemes and why are there no arrests?”
Ningi shared personal experiences where he narrated how his constituents who got stipends of between N5,000, N10,000 and N20,000, only ended up investing it in Ponzi schemes instead of putting the money to other useful purposes.
Before rounding off the debate, Akpabio recalled the case of Umanah Umanah, a ponzi scheme that was very popular in Port Harcourt in the 1990s.
He said investors were promised quick returns and encouraged to keep depositing more money until the scheme crashed eventually.
“It was such a terrible nightmare and many people lost money”, Akpabio said.
He directed that the investigation, which must include zonal public hearings where necessary, must be thoroughly done to ensure that all operators of Ponzi schemes were brought to book.
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