CBEX: Senate launches probe into ponzi schemes in Nigeria

The Nigerian Senate has directed its relevant committees to conduct a thorough investigation and public hearing into the operations of Ponzi schemes across the country, amid growing concerns over their negative impact on citizens and the economy.

The decision was made during plenary, with the Senate mandating the Committees on Capital Market; Banking, Insurance and Other Financial Institutions; Anti-Corruption and Financial Crimes; and ICT and Cybercrime to spearhead the probe.

This followed the adoption of a motion on “Investigative hearing into the operations of Ponzi Schemes in Nigeria, with particular reference to the recent Crypto Bullion Exchange (CBEX) incident” at plenary on Wednesday.

The motion was sponsored by Sen. Abiru, Adetokunbo (APC-Lagos) and Sen.Osita Izunaso (APC-Imo).

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Adetokunbo, presenting the motion, said that the economic well-being and financial security of Nigerian citizens were essential pillars of national stability and growth.

He said that it was the duty of the government to protect the populace from exploitative, predatory and fraudulent financial practices and schemes that threaten their livelihoods.

He expressed concerns on the rapid proliferation and alarming rise of unregulated and fraudulent investment schemes commonly known as Ponzi or pyramid schemes.

He listed companies such as MMM Nigeria in 2016, MBA Forex in 2020, that had repeatedly defrauded millions of Nigerians.

This, he said was causing severe financial hardship and in some cases driving victims to depression, family breakdowns and even suicide.

“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 collapse, resulted in investors losing more than N1.3 trillion making it one of the most devastating financial scams in the country’s history.”

He said that the CBEX incident was 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.

According to him, the schemes often employ tactics such as referral commissions, celebrity endorsements and fake testimonials to build credibility and drive recruitment.

He said that it was worrisome that CBEX operated for an extended period without facing sanctions by either the Securities and Exchange Commission (SEC).

He added that not even the Central Bank of Nigeria (CBN), the Nigerian Financial Intelligence Unit (NFIU), or the Economic and Financial Crimes Commission (EFCC) sanctioned the operators of these ponzi schemes.

Adetokunbo said that the growing sophistication of such fraudulent platforms, combined with high youth unemployment, widespread poverty, low levels of financial literacy and a lack of access to formal investment opportunities” make the Nigerian population increasingly vulnerable to such schemes”.

According to him, Section 88(1) (a) and (b) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), empowers the National Assembly to conduct investigations into “any matter to which it has power to make laws.

He also said that constitutional powers empowered the Senate to investigate failure of regulatory agencies to monitor and prevent the CBEX fraud and to propose necessary legislative or administrative reforms to forestall future occurrences.

He said lack of coordinated oversight, real-time monitoring and strict enforcement by relevant agencies had created an enabling environment for such schemes to flourish

He noted that this had eroded public trust in legitimate financial institutions and posed systemic risks to the economy.

Adetokunbo said there was need for urgent public education to prevent further exploitation of unsuspecting citizens given increasing sophistication of Ponzi scheme operators and its devastating consequences of their actions.

The motion, which was described as apt and germane, received overwhelming support from lawmakers such as senators Mohammed Monguno(APC-Borno),Adamu Alero (APC-Kebbi) Solomon Adeola (APC-Ogun) and Abdul Ningi (PDP-Bauchi) among others.

President of the Senate, Godswill Akpabio said that the motion concerned all and that stringent measures and punishment should be put in place and meted to perpetrators of the schemes going forward.

He also placed emphasis on the need to educate citizens to be weary of the ponzi schemes.

(NAN)