CBEX: Lessons for Investors, Regulators

 Omolabake Fasogbon..

The recently crashed cryptocurrency trading platform, Crypto Bridge Exchange Smart-Treasures, better known as CBEX, has opened a new wave of discussion around Ponzi schemes in West Africa’s largest economy.

Since 2016, Nigerians have lost approximately N5 trillion to Ponzi schemes that often promise unrealistic investment returns.  The most recent, CBEX, following its collapse, made off with over N1 trillion of Nigerians’ hard-earned money, triggering wailing and mourning across the country by its subcribers.

This is not the first time Nigerians have fallen prey to Ponzi scheme, the Mavrodi Mundial Movement  (MMM) of 2016,  which ripped Nigerians of not less than N18 billion, is still fresh in the memory. It does not stop at that, others, including Ultimate Cycler, Twinkas and, Red King Chinmark Group, amongst others have also had their own share of the country’s wealth base. 

As usual, these platforms failed, provoking widespread outcry from losing investors. However, in no time, the matter goes under the carpet, the unscrupulous promoters strategize on to the next move. This has been the circle in the country. 

Financial analysts reckon that greed, social pressure, social proof and possibly, financial ignorance mostly cause investors to ignore suspicious signs that should ordinarily be a turn-off. 

An anti-fraud expert, Prof. Godwin Oyedokun said, “Warning signs like high returns with little or no risk, pressure to invest, no tangible product, absence of legal protection, and unregistered professionals have always accompanied most Ponzi schemes, yet, they thrive.”

The Securities and Exchange Commission (SEC) had earlier warned against dealing with unregistered trading platforms, citing the newly enacted Investments and Securities Act 2025.

“By this Act, it is an offence in Nigeria for any entity that is not registered by the commission to carry out the business of online foreign exchange trading platforms or related services, “SEC had stated. 

Continuous attraction to this scheme, despite their regrettable end, has since raised concerns from financial pundits who highlighted key lessons for investors and regulators to take away. 

Public Finance, expert, Prof. Chiwuike Uba, alongside Oyedokun are among those who shared some lessons for investors below:

Due Diligence 

Always research and understand an investment platform thoroughly. Check for the company’s history, reviews from other investors as well as regulatory compliance. CBEX operated without approval from SEC and the Central Bank of Nigeria (CBN), making it illegal. Regulatory registration ensures transparency and accountability. If a platform is unwilling or unable to provide proof, walk away.

 Follow 10–30–60 Investment rule

One major mistakes people make is putting all funds into a single investment. Diversifying across different assets helps mitigate risks and protect against total loss. Avoid investing all your money into one high-risk venture. The 10–30–60 rule prescribes investing 10 percent in speculative investments, 30 percent on moderate-risk, and 60 percent on stable, long-term assets. This strategy reduces the impact of a single investment failure. 

 Understand Risks of Unregulated Platforms

Platforms operating outside formal regulation, like CBEX, present significant risks, including fraud and cyber-attacks. While some platforms claim regulatory ambiguity due to evolving markets, responsible players actively seek compliance. 

 Risk Assessment

Understand your risk tolerance and the risks associated with specific investments. High returns often come with high risks. Only invest what you can afford to lose. 

Avoid Herd Mentality

Many CBEX investors were influenced by peer pressure, online testimonials, or aggressive marketing. Effective investing requires independent research. Always verify the background of platform operators, check for third-party reviews, and avoid platforms that lack transparency or offer vague business models. Use tools like LinkedIn, Google alert, and independent financial blogs for deeper insights.

Demand Transparency

CBEX operated in secrecy, offering little insight into its management or decision-making. A legitimate investment platform should have clear governance, regular financial reporting, and third-party audits. Before investing, request audited financial statements and full operational disclosures. Avoid platforms that refuse transparency or use complex jargon to hide their operations.

Resist emotional manipulation     

Scam platforms often prey on emotional triggers such as urgency or the fear of missing out (FOMO). Don’t make financial decisions based on social pressure or panic. Create a rule to delay high-stakes decisions for at least 48 hours to avoid impulsive choices. During this period, consult a trusted advisor and carefully evaluate the opportunity.

Have an Exit Strategy

Even the best investments can fail. Always have a plan in place for how to exit and mitigate losses. Maintain an emergency fund, limit liabilities, and separate your business capital from speculative investments. Regularly review your portfolio and seek professional advice to ensure your investments align with your financial goals.

Advocate for Stronger Regulation

The scale of the CBEX collapse highlights systemic failures in financial regulation. Beyond protecting yourself, advocate for improved consumer protection laws and more robust enforcement from regulatory bodies. Support initiatives for real-time scam alerts, whistleblowing platforms, and the establishment of an investor protection council to safeguard the financial ecosystem.

Document Everything

After the CBEX collapse, many victims faced difficulty pursuing legal recourse due to the lack of formal contracts. Always document your investments: receipt of funds, terms of service, and communication with the platform. In case of a collapse, join class-action lawsuits, report to the SEC or EFCC, and seek legal support through consumer advocacy organizations.

Emergency fund                                 

Have an emergency fund that covers several months of expenses. This can provide a safety net in case of unforeseen investment losses.