Jerry had won best staff in the department for four consecutive years. He was one of the nicest people I

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Ponzi schemes like CBEX have repeatedly exploited gaps in financial literacy and regulatory enforcement, inflicting deep wounds on the nation’s economy and eroding public trust.

By promising unrealistic returns and relying on ever growing recruitment, these schemes collapse once new contributions dry up, leaving investors with crippling losses. They damage the integrity of formal banking, clog payment systems with suspect transactions and overwhelm enforcement agencies.

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The following reminders reveal how these operations unfold and the lasting harm they cause to Nigeria’s financial stability.

1. Promises of guaranteed, above market returns

Operators lure investors with pledges of fixed returns far above genuine market yields, often 20 to 50 percent per month. They use enticing membership tiers and early‑joiner bonuses to build large pools of capital. Marketing materials and online ads highlight fabricated success stories to mask the fact that payouts to existing members come from the funds of new recruits.

2. Reliance on continuous recruitment

These schemes require a steady stream of new participants to sustain payouts. Existing investors are encouraged to recruit friends and family through referral incentives and multi‑level rewards. When recruitment dries up, often just a few months after launch, cash flow collapses and the vast majority of participants lose their entire investments.

3. Aggressive use of social networks

READ ALSO: EFCC partners INTERPOL to hunt CBEX operators after ₦1.3bn scam

Fraudsters exploit WhatsApp, Telegram and social media platforms to spread invitations and build community groups. They post false testimonials and screenshots of purported transactions to create a veneer of legitimacy. Viral messaging and peer pressure accelerate membership growth but also magnify the speed and scale of the eventual fallout.

4. Fabricated transaction records

To maintain trust, operators provide account statements and dashboard views that show regular, impressive profits. These records are entirely fictional, designed to discourage withdrawal requests. When investors eventually try to access their funds, they discover that the balance on their statements does not exist in reality.

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5. Exploitation of regulatory gaps

Many Ponzi schemes register as cooperative societies or frame themselves as tech startups offering peer‑to‑peer services. They take advantage of outdated laws and slow enforcement to operate unchecked for months or years. Regulators often lack the resources or clear legal authority to act swiftly, allowing fraudsters to extract billions before intervention.

INFORMATIVE: What is CBEX and has it crashed indefinitely?

6. Strain on payment systems

Large volumes of deposits and attempted withdrawals place sudden pressure on banks and mobile money platforms. In response, financial institutions impose stricter transaction limits or freeze suspect accounts, which disrupts ordinary customers and damages confidence in digital payments. The ripple effects can slow national financial inclusion efforts.

The long‑term economic and psychological fallout of ponzi schemes

Beyond the immediate loss of funds, sometimes in the hundreds of billions of naira, victims suffer severe emotional distress and a lasting reluctance to invest. Communities that once pooled resources for collective ventures become wary of all group‑based financial schemes. Rebuilding trust requires sustained education, transparent enforcement and visible convictions of perpetrators.

These reminders highlight the critical need for careful vetting of any investment opportunity, stronger financial education at all levels and more agile regulatory responses. Only by addressing these vulnerabilities can Nigeria protect its citizens from future fraud and foster a more resilient financial environment.

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