Ponzi schemes, fraudulent investment scams promising high returns with little risk, have plagued Nigeria for decades, exploiting economic vulnerabilities and the allure of quick wealth. From the infamous Mavrodi Mondial Moneybox (MMM) in the mid-2010s to the recent CBEX controversy, these schemes have left a trail of financial ruin, eroded trust, and exposed regulatory gaps. This piece traces their history, examines their mechanics, and assesses their profound impact on Nigerians.
The Roots of Ponzi Schemes in Nigeria
Ponzi schemes in Nigeria predate the digital era, with early examples like the Umana-Umana platform in Port Harcourt and Calabar, Planwell in Edo, and Nospecto in Lagos during the 1980s and 1990s. These “wonder banks” lured investors with promises of exponential returns, only to collapse when new investments dried up. The lack of robust financial regulation and widespread poverty created fertile ground for such scams.
The MMM Phenomenon (2015–2017)
The modern era of Ponzi schemes in Nigeria was defined by the arrival of MMM in November 2015. Founded by Russian conman Sergei Mavrodi, MMM presented itself as a “social financial network” where members “provided help” to one another, promising 30% monthly returns. Launched during Nigeria’s worst recession in decades, with inflation soaring and banks tightening credit, MMM’s timing was impeccable. It attracted over three million Nigerians, from farmers to professionals, desperate for financial relief.
MMM’s aggressive marketing, leveraging community forums, churches, and social media, fueled its rapid spread. Participants saw initial payouts as a lifeline—paying rent or school fees—blinding them to the risks. Despite warnings from the Central Bank of Nigeria (CBN) and other regulators, millions still ignored the red flags.
In December 2016, MMM froze all accounts, citing “system overload” to “prevent problems during the Yuletide.” The collapse was catastrophic. Estimates vary, but the Nigeria Deposit Insurance Corporation (NDIC) reported losses of N18 billion, while the CBN pegged it at N12 billion. The fallout was tragic: suicides, broken families, and shattered livelihoods. A man reportedly took his life after losing everything, highlighting the human toll. Yet, the lesson was fleeting, as new schemes quickly emerged.
Post-MMM Surge: A Cycle of Scams
The MMM crash did little to deter Nigerians, as economic hardship and financial illiteracy fueled a wave of copycat schemes. Between 2016 and 2021, platforms like Twinkas, Ultimate Cycler, Get Help Worldwide, Loom, Racksterli, and MBA Forex swindled billions. Twinkas promised to double investments in days, while MBA Forex, operating from 2018 to 2021, defrauded investors of N213 billion by posing as a forex trading platform. Agricultural crowdfunding scams, offering 15–50% returns in months, also proliferated, masking their Ponzi nature with tangible investment narratives.
By 2022, the NDIC estimated that Nigerians had lost N911.45 billion to Ponzi schemes and related frauds over 23 years, with N300 billion lost in the five years post-MMM. Schemes like Nospecto (N106 billion), Galaxy Transport (N7 billion), and Chinmark Group further eroded savings. The Economic and Financial Crimes Commission (EFCC) made arrests, such as Emmanuel and Victoria Jaiyeoba, who defrauded investors of N935 million, but convictions were rare, and funds were seldom recovered.
CBEX (2025)
Fast-forward to April 2025, and the current CBEX saga has reignited public outrage after it has been confirmed that the platform, promising high returns through vague investment models, has also folded. In truth, CBEX exhibited classic Ponzi hallmarks: unrealistic profits, reliance on new investors, and aggressive recruitment. Videos circulating online showed distraught investors at CBEX’s Lagos office demanding answers, and in another one in Ibadan on Monday, they had their office ransacked.
It has recently been labelled as a questionable investment platform, attracting skepticism on X after multiple investors took to the social media site to express their dissatisfaction following the suspension of the withdrawal feature on April 10.
Its operations commenced in Nigeria in 2024, despite claims of existence since 2017, a timeline that contradicts its domain registration and distinguishes it from the legitimate China Beijing Equity Exchange.
The platform was marketed as an investment vehicle employing artificial intelligence (AI) to trade on behalf of its users, promising a 100% return on investment within just 30 days. The fact that investments are accepted solely in USD, without publicly disclosed minimum or maximum limits, makes it appealing to a broad audience.
The platform’s website was crafted to mimic well-known exchanges like ByBit, creating a facade of trustworthiness, although it has no ties to recognised financial institutions.
A piercing hallmark of CBEX is its referral-driven incentive scheme. Participants earn bonuses for bringing in new users, with rewards escalating based on the size of their “upline,” a network of referrals. This multi-level marketing (MLM) model promotes vigorous recruitment, pledging more significant returns for more extensive networks.
Nonetheless, the platform enforces strict conditions on withdrawals. New users encounter a 40-45-day lock-in period before they can access their funds, and withdrawing early comes with a 20% penalty. Some users have reported an extra, undisclosed requirement demanding they recruit at least 12 referrals before being allowed to withdraw their profits, redirecting the focus from investing to recruitment.
Last Thursday, users indicated that withdrawals had been suspended, with the platform citing “system upgrades” and assuring access by April 15. These delays and reports of aggressive customer support urging additional deposits have intensified potential fraud concerns.
While specific losses from CBEX remain unclear, social media sentiment compares it to MMM and Racksterli, suggesting significant financial damage. The scheme’s potential collapse has sparked debates about greed versus desperation, with some users expressing “zero remorse” for victims, arguing that warnings were ignored.
Why Ponzi Schemes Thrive in Nigeria
With high unemployment and inflation, Nigerians seek quick financial alternatives. Ponzi schemes exploit this desperation, offering hope where Banks, with high interest rates, fail to deliver. These are coupled with the prevalent issue of financial illiteracy, as many Nigerians appear to lack the knowledge to distinguish legitimate investments from scams.
Also, until this year, when President Bola Tinubu signed the Investments and Securities Act 2025 into law, the previous regulations did not explicitly ban Ponzi schemes, only requiring registration with the SEC. Banks have also been implicated in laundering scheme funds yet face little accountability, and the quest for “easy money” despite regulatory warnings is often dismissed due to low trust and a legacy of corruption and inefficiency. MMM’s popularity soared despite CBN and SEC alerts.
Additionally, celebrity or influencer endorsements often amplify these schemes’ appeal. MMM’s use of “guiders” and CBEX’s social media hype followed this playbook.
Regulatory Efforts and Going Forward
The SEC, CBN, and EFCC have issued warnings and shut down schemes, but enforcement lags. In 2019, the SEC blocked N1.12 billion in Ponzi-related bank accounts, yet banks face no penalties for complicity. Some experts have advocated for early intervention, urging collaboration with fintech and the Nigerian Financial Intelligence Unit to monitor suspicious transactions.
However, with the new ISA Act 2025, the SEC has gained increased authority to access essential information from even telecommunications and internet service providers to identify illegal activities such as insider trading, market manipulation, and fraudulent investment practices. This enhanced regulatory power aims to improve investor protection and maintain fairness in the capital market.
The new legislation also addresses the widespread use of Ponzi schemes in the Nigerian Capital Market, enabling the SEC to take decisive action and impose severe consequences on scheme promoters, including a minimum fine of N20 million, a prison term of up to 10 years, or both.
Moreover, ISA 2025 requires the implementation of Legal Entity Identifiers (LEIs) for transactions within the capital market, which will facilitate better monitoring of financial activities and minimise the risk of fraud.
From MMM’s spectacular collapse to CBEX’s ongoing fallout, Ponzi schemes have exploited Nigeria’s economic woes, financial illiteracy, and regulatory gaps for decades. They promise liberation but deliver devastation, costing billions and shattering lives.
While some blame victims’ greed, the root lies in systemic issues—poverty, inaccessible credit, and weak oversight—that make scams seductive. Breaking the cycle requires stronger laws, financial education, and inclusive banking. Until then, as many warn, Nigeria risks reliving this painful history with every new scheme.
