When a stranger sends you a message on WhatsApp, it’s easier to be sceptical, especially about doubling your money. However, we are likely to let our guard down when it comes from our friends or loved ones; this was how Bose and her friend, Mirabel, got scammed out of N100,000 during NYSC in 2020.
It was a busy day. At the peak of work hours, Mirable’s sister called on WhatsApp with a gist about how she had invested money in an organisation and made 100% profit after 30 days. “I left the capital there so it will yield more,” the sister added. Okay, “After the next 30 days, let me know how it goes,” Mirabel responded.
A month later, Mirabel’s sister reached out again to share that she made a 100% gain from the investment, that she will put the majority of her savings in her next investment, and that their brother, who also invested, got his profit and some other people in the neighbourhood. Feeling left out of the cashing out, Mirabel excitedly told Bose her roommate about the investment, and they sent their sister N50,000 each to invest for them. Unfortunately, this time, they received news of the organisation closing down and people going to the office to salvage anything they could lay their hands on as compensation. Bose and her friend lost their money, and her sister lost her lifetime savings.
Mirable remembered her sister’s ordeal when she saw a video on social media of a lady who cried out that her life savings had gone in CBEX. She had hoped to quit her 8-6 pm job soon and begin her business upon cashing out, but now she has been put back to square one. Similar to how she had introduced Bose, her friend, some Nigerians who invested in CBEX have also indicated that they were introduced to the platform by their friends.
Global Scam Trend
According to the Global Anti-Scam Alliance (GASA)’s 2024 scam report, scammers have siphoned over $1.03 trillion globally within one year. Most of these scams were revealed to have happened via phone calls or Text messages, including email and instant messaging apps such as WhatsApp, Instagram, Facebook Messenger, etc. The GASA report further indicated that almost half of the world encounters scams once a week, highlighting the several forms of scams rampant in different regions. Among these scams, the investment scam was shown to be the most rampant in Nigeria.
Investment Scam in Nigeria, Its Implications and What Made It Thrive
Investment scams are schemes in which people are promised high returns with little or no risk, but little or no actual investment occurs. Nigeria’s most common investment scams have been Ponzi Schemes. A Ponzi scheme is an investment scam in which returns are paid to earlier investors using the capital from newer investors. An example of such investment is the infamous 2015 MMM, which collapsed 2 years later. MMM is a Ponzi scheme investment that promised 30% returns on investments for helping others within 30 days, connecting participants to lend money to each other. This, however, collapsed with millions of Nigerians losing about N18 million to the scheme. Ultimate Cycle is another Ponzi scheme involving a matrix scheme that requires participants to pay into the system and recruit others to earn returns. Unlike MMM, this scheme promised a 300% return to its investors within 45 days.
Cryptocurrency Ponzi scams are also another type of investment scam prevalent in Nigeria. Examples of this scam include the recent CBEX, a digital investment platform offering 100% profit after 30 days of purported AI trading. CBEX collapsed in April 2025, leaving investors unable to access their funds, which caused Nigerians to lose around $800 million. Like CEBEX, Bitconnect is another cryptocurrency investment platform that operated from 2016 to 2018, promising varying high returns through a lending program.
These investment scams highlight the destructive cycle of greed and financial anguish that has affected many, particularly in Nigeria. At their core, scams represent a distorted form of economic activity, with adverse implications scaling from the individual household unit to the nation at large.
According to Agaku A. Elijah, a master of economics and a project management expert at the Centre for Democracy and Development (CDD) in West Africa, individuals who lose money often become victims of loan sharks. This happens because they are compelled to fulfil their pending financial obligations and to address other needs they had hoped to cover with the profits from their investment. In certain situations, the psychological well-being of scammed investors may be adversely affected, leading to a decline in their productivity and overall contribution to society.
At the macroeconomic level, a decline in human productivity, among other factors, affects economic growth and productivity. This is seen from cases like CBEX, where 600,000 Nigerians invested in US dollar deposits, causing significant capital flight from the domestic economy.
Samuel Oyekanmi, Research and Insight Lead at Norrenberger Financial Group, elaborates further by explaining that investment scams involving USD increase demand for dollars, which pressures the exchange rate, leading to potential depreciation, inflation, and other adverse economic effects. He also highlighted the critical issues destabilising legitimate investment opportunities in the investment landscape. “Scams like this erode trust and confidence in the capital market”, he said. This stifles innovation and economic growth. Additionally, the allure of higher returns makes lower-yielding legitimate options less attractive.
The underlying factor that has enabled the recycling and thriving of these scams in Nigeria stems from:
- Economic vulnerabilities faced in Nigeria have caused people to seek quick wealth to meet the ever-increasing financial obligations.
- Information asymmetry explains how scammers exploit the information gap to deceive victims.
- Fear of missing out on the gains prompts people to join their friends or family to invest.
- Human greed has pushed people into making such investments.
- Financial illiteracy, people not knowing how to spot a scam venture or a legit investment.
- Physical presence, some of these investment scams have physical offices, which influence people’s participation.
Common Tactics
Reviewing these scams reveals a trend in the tactics used by these schemes to entice individuals into investing their money. Common tactics identified include:.
- Message of Hope: The messages from the scammers from MMM to the recent CBEX scam resonate around “Hope” and “Charity.” The promoters of CBEX have indicated in their messages that the investment is open to everyone irrespective of their social status and that the aim is to make life easier for Nigerians. “We want to save them from suffering and hardships,” said one of the marketing officials of CBEX. Further, just like MMM, which was built like a charity scheme, members are required to help another member by paying directly into their bank account. CBEX also engaged in charity activities and other community outreach.
- Using Promotions/Influencers: This entails scammers’ strategies to gain trust, such as presenting false credibility or using emotional appeals. For example, the CBEX, though not recognised by the EFCC, operated and was promoted by a company registered as ST Technologies International Limited with the Corporate Affairs Commission (CAC) on September 25, 2024 and the Economic and Financial Crime Commission on January 16, 2025. Further, they also recruit influencers and marketing strategy offline and online via radio, social media platforms, churches, gatherings, etc, reaching both the rich, poor and uneducated
- The Referral Scheme: Most of these scam platforms are built on a network scheme that requires members to refer and earn from downlines. Beyond the marketing effort of scam organisations, members who initially gained from the investment also refer to as many people as possible. Most schemes like CBEX, MMM and Ultimate Cycle encourage referrals by providing referrer bonuses.
Lessons From Historical Trends to Combat Scams
The repeated use of similar patterns in schemes like Ultimate Cycle, MMM, and now CBEX that have robbed Nigerians of their money underscores the urgent need for a response to bridge the information asymmetry between scammers and potential investors. The economic ramifications of these scams indicate that their financial burdens impact society on a larger scale, extending beyond individual investors. Consequently, regulatory bodies and pertinent stakeholders must engage in intensive collaboration. The following strategies, informed by previous experiences, can be implemented to address these issues
- The Need for Tighter Regulations: Samuel Oyekanmi shared his concern about how CBEX investment was quite loud. “I will be surprised if EFCC says they never heard about CBEX during its initial state,” he stated. Regulatory authorities should be on guard and, at any point of discovering a potential investment scam, they should devise campaign strategies to warn and sensitise people against it.
“The regulators have to be aggressively proactive towards fighting such investment scams. Then we can tame people falling victim” – Samuel Oyekanmi.
- Education about Risks and Returns: From my experience, in legitimate investment, risks and returns on investment are directly proportional. This implies that a higher return on any investment will most likely be associated with a higher risk of losing capital. So, any high returns without commensurate risk should be viewed with scepticism. Samuel Oyekanmi indicated that investment schemes that promise unrealistic short-term returns, especially in volatile markets like crypto, or have no underlying assets, are red flags and need to be questioned. He warned that one should always ask what the underlying assets are—whether it’s a commodity, foreign exchange (FX), or cryptocurrency.
He added that even if the underlying asset is FX, for instance, you won’t find any market chart that shows volatility capable of delivering a 20% return in a single day, regardless of the chart’s direction, without extraordinary circumstances, such as a war.
- Technological Solutions: As scams become more sophisticated, banks and financial institutions invest in advanced AI and machine learning tools to detect unusual activity and protect consumers in real time. This improves the detection and prosecution of perpetrators and fosters international cooperation to address cross-border scams.
Additionally, Agaku Elijah added that systems exist in developed countries like the United States to alert security agencies nationwide when a scam is detected. The Nigerian EFCC should deploy such measures to alert its branch offices nationwide to check the legality of investment schemes. Emphasing that Nigeria’s “regulatory agencies needed to up their game.”
- The fear of losing out: Again, from my experience, in essence, you don’t truly lose anything if you take your time to properly research or decide to avoid investing your time and money. The real loss occurs when an investment is made and ends up being a fruitless endeavour.
- The Zero Sum Game: In Samuel’s experience, some people know these investment schemes are scams but still choose to promote them, hoping to profit from the market or outsmart the scheme. He warned that, according to gambling rules, there are no winners, only losers. Implying that every gambling game is designed so that the odds are statistically against the player, making the probability of winning very low. He further likened it to a zero-sum game.
In his words, these scams are “just as in a pyramid scheme, at some point, you will not be able to get as many people to get in anymore; the law of diminishing returns begins to set in, and that’s when you start seeing those kinds of schemes crash.” Hence, some persons attempt to make their profits and exit quickly. However, this approach is highly risky because you cannot outsmart the system. You have no way of knowing your position within it—whether you are in the middle, the bottom, or the top. If the law of diminishing returns catches up with you, you risk losing your money.
Hence, some persons attempt to make their profits and exit quickly. However, this approach is highly risky because you cannot outsmart the system. You have no way of knowing your position within it—whether you are at the middle, the bottom, or the top. If the law of diminishing returns catches up with you, you risk losing your money.
