Following the collapse of the online investment platform, CryptoBank Exchange (CBEX), it has become more crucial than ever to recognize and steer clear of fraudulent investment schemes.
Nigerians, in particular, remain vulnerable to a wave of Ponzi schemes, driven largely by the country’s challenging economic conditions. Many victims overlook the glaring warning signs from the outset, falling prey to promises that are too good to be true.
The best Ponzi scheme does not actually look like a Ponzi scheme, it looks like an opportunity. Opportunity to make returns on your money without doing so much. Even that is a prayer point. Now, how do you recognize these “investments” for what they are?
First, let's clarify that the CBEX is a Ponzi scheme. At this point, we all know there’s no way to get back the almost 900 million dollars that they stole, right? CBEX accumulated so much because they knew who to target.
It was a well structured fraud and that’s why it didn’t look or feel like it at the start. Let’s look at the similarities that CBEX has with previous popular Ponzi schemes that wiped millions of naira from Nigerians.
Referrals
Like every fraud, CBEX also has a paying referral system. Users were encouraged to invite interested friends to get a certain increment on their investment. After all, who wouldn’t want their family to benefit from a huge opportunity? The truth is, referrals with a bonus is just an opportunity to get hands on other people’s money without doing the advertisement themselves. With this, they lured thousands of Nigerians. It’s basic psychology, if they can make you invest your hard earned money, chances are you will invite your friends and family to do so too. Remember the referral chain of MMM?
Inconsistency
Leaders of Ponzi schemes have gotten innovative over the years. They change tactics and strategy to ensure that they look as authentic as possible. See how racsterli used a popular artist to push their fraud?
CBEX built a fake website and wasn’t registered on the domain they said they were registered on (No SEC registration). They said they have been operating since 2017 but guess what, they only started last year. Even their affiliation with a business in China was a lie and the Beijing equity exchange was vocal about dentity theft. The inconsistencies may be hard to notice but one thing for sure, if it looks too good to be true, it probably is.
No work for huge pay
This is where most people fall into Ponzi schemes. It’s tempting to get huge pay without actually doing anything but when it comes to “using your money to work”, be very careful.
Again, similar to other ponzi schemes, Cbex did the same thing. They allegedly use your money to trade and give you part of the profit and you’ll be able to withdraw at certain times. Whereas, they are using your money to pay other people and when those ones get hooked and put more money into it, they pay you too, a circle of lies and deceit.
The country is hard, the economy is bad and everyone is managing, so having your hard-earned money snatched from you is an unfortunate event. If your only regret is that you didn’t start early and cash out, you will fall into another Ponzi-scheme.
Intricate concealment
This is another thing Ponzi schemes have in common: their investments are often intricate and covert, with strategies that are difficult to understand. This is deliberate to astound investors and discourage them from looking deeper.
Unauthorised sellers, unsanctioned investments
Ponzi schemes deal with unauthorised sellers or unsanctioned investments. The latter are, in most cases, not subjected to the necessary regulatory scrutiny.
What should you do now?
Honestly, there's very little that can be done at this point. These individuals spent months carefully planning and have already vanished.
You may not recover the lost funds, but you've gained valuable insight into the tactics used by these scammers—knowledge that will help you avoid falling victim again.
The digital trading landscape is continually evolving, with new threats emerging at a rapid pace. It’s essential to stay informed by following credible news outlets, industry reports, and regulatory updates. Staying up to date equips you to adapt your strategies and steer clear of platforms that exhibit signs of instability or potential fraud.
The CBEX collapse serves as a stark reminder that safeguarding your investments in the digital age demands ongoing vigilance and well-informed decision-making.
