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Ponzi schemes lure participants with grand promises but rely entirely on fresh funds rather than genuine profits. Early detection of red flags can prevent financial ruin.

By understanding key warning signs such as lack of licensing, inflated return claims and urgent recruitment tactics, prospective investors can protect their savings. This insight outlines key indicators to help you spot a CBEX‑Style fraud early.

Applying these guidelines will enhance your due diligence and reduce the risk of falling victim to similar schemes in the future.

ALSO READ: Ponzi scheme: 5 facts about CBEX digital trading platform

• Unregistered or unlicensed operation

Before investing, confirm the platform appears in the Securities and Exchange Commission’s official registry or has a valid Central Bank of Nigeria licence. Fraudsters often operate without any formal approval, making it illegal for them to solicit deposits.

If you cannot find clear, current registration details on government websites, treat the opportunity as high risk.

• Promises of implausible returns

Any guaranteed return above 12 or 15% per year is a warning sign. Legitimate investments fluctuate with market conditions and cannot promise fixed, high yields without substantial risk.

Ask for audited performance reports and compare claimed returns to industry benchmarks. If the numbers outpace market averages by a wide margin without clear explanation, steer clear.

• Emphasis on recruitment over revenue

When a platform rewards you more for referring new members than for actual product sales or trading profits, it is operating like a pyramid. Examine promotional materials and compensation plans to see whether income depends on growing your downline.

Sustainable businesses focus on delivering goods or services; schemes that prioritize recruitment rewards will collapse once sign‑ups slow.

• Obstructed or delayed withdrawals

A reliable platform processes withdrawals quickly and transparently. If you encounter unexpected paperwork requirements, multiple approval steps or repeated delays, these may be tactics to keep your funds locked in. Test small withdrawals before committing large sums and monitor whether your requests are honored within the promised timeframe.

• Fabricated performance statements

Some fraudulent sites display screenshots or PDF statements showing credited balances that never hit your actual account. Always cross‑check with your own bank or wallet history and request live transaction IDs. Genuine platforms provide verifiable transaction records and can explain any discrepancies immediately.

• Anonymous or unverifiable leadership

Legitimate firms proudly share biographies and professional histories of their founders and executives. If a site offers only first names, stock photos or unverifiable social media profiles, you lack any accountability. Search for team members on LinkedIn or industry news; the absence of credible, traceable leadership indicates a high likelihood of fraud.

• No clear business model or revenue source

Ask how the company generates profits. Does it trade commodities, manage real estate rentals or run a peer‑to‑peer lending service? If the operators cannot explain in straightforward terms where returns come from, their income probably depends on new deposits. Genuine businesses outline their revenue streams clearly in white papers or prospectuses.

• Excessive marketing and influencer hype

Ponzi operations often saturate social media with flashy endorsements and sponsored posts while avoiding coverage in reputable financial publications.

If you see a flood of paid testimonials but no independent reviews or analyst reports, the marketing may be masking underlying weaknesses. Look for balanced, third‑party analyses before trusting promotional claims.

• Absence of independent audits or custodianship

Trustworthy platforms engage recognised auditing firms and use third‑party custodians to hold client funds. Ask for recent audit certificates and custodian agreements. If the company has no external verification of its assets and liabilities, it may be hiding a shortfall that will surface only when it collapses.

• Regulatory alerts and credible media warnings

Stay current with notices from the SEC, the Economic and Financial Crimes Commission and other watchdogs. Regulators often publish lists of suspect entities, and credible news outlets report on major investigations.

If a platform appears on any official warning list or is the subject of ongoing inquiries, treat that as a clear signal to withdraw and avoid further involvement.

By making these checks a standard part of your investment process, confirming licenses, demanding clear disclosures and consulting trusted experts, you strengthen both your personal financial safety and the industry’s resilience.

Stay vigilant as schemes evolve, seek professional advice whenever uncertainty arises and educate those around you on these safeguards.

Through collective vigilance and shared knowledge, Nigerian investors can cultivate a more transparent, accountable and secure investment landscape for everyone.

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