Senate probes Ponzi schemes in Nigeria

THE Senate has begun a probe into Ponzi schemes in Nigeria, with particular reference to the recent Crypto Bullion Exchange, CBEX, incident.

It said the holistic investigation into their activities had become imperative, following the rapid proliferation and alarming rise of unregulated and fraudulent investment schemes, commonly known as Ponzi or pyramid schemes, such as MMM Nigeria in 2016; MBA Forex in 2020, to mention a few, which have repeatedly defrauded Nigerians, causing severe financial hardship and, in some cases, depression, family breakdowns, and even suicide.

Consequently, the Senate mandated its joint committees to conduct a comprehensive investigative and public hearings on the operations of Ponzi schemes in the six geo-political zones of the country to urgently  educate and sensitise Nigerians on the need for awareness and report back in four weeks.

The committees are banking, insurance and other financial institutions; capital market; anti-corruption and financial crimes, and ICT as well as cybercrime. 

The Committee on Banking, Insurance and Other Financial Institutions, led by Senator Adetokunbo Abiru (APC,  Lagos East), will lead other committees in carrying out the assignment.

Resolutions of the Senate, yesterday, were sequel to a motion sponsored by Senator Adetokunbo Abiru and Chairman, Senate Committee on Capital Markets, Senator Osita Izunaso (APC, Imo West).

In his presentation of the motion, Abiru explained that the Senate was seriously  aware that the economic well-being and financial security of Nigerian citizens were essential pillars of national stability and growth.

According to him, it is the duty of government to protect the populace from exploitative, predatory and fraudulent financial practices and schemes that threaten their livelihoods.

He said: “The Senate is deeply concerned about the rapid proliferation and alarming rise of unregulated and fraudulent investment schemes, commonly known as Ponzi or pyramid schemes, such as MMM Nigeria in 2016; MBA Forex in 2020, to mention a few, which have repeatedly defrauded millions of Nigerians.

“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."

“Senate also 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;

“Shocked that despite the scale of operations and visibility of CBEX, it operated for an extended period 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.

“Mindful of the urgent need to protect Nigerian citizens, especially vulnerable groups, from financial predators by investigating the lapses that allowed CBEX and similar platforms to thrive unchecked, and to recommend robust mechanisms for monitoring, prevention, and prosecution.”

In his contribution,  the Senate Chief Whip, Senator Tahir Monguno, APC,  Borno North,  who seconded the motion, lamented that the trade in Ponzi schemes in the country had become very alarming, affecting Nigeria’s economic growth. 

He said the scheme operators were taking advantage of vulnerable Nigerians and urged his colleagues to investigate how the schemes were perpetrating the act, despite the regulatory bodies.