By Mohammed Danlami, Abuja
The Senate has mandated the Joint Committees on Capital Market; Banking, Insurance and Other Financial Institutions; Anti-Corruption and Financial Crimes, and ICT & Cybercrime to conduct a comprehensive investigation on the operations of Ponzi schemes in the country.
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” sponsored by Senator Abiru Adetokunbo (Lagos East) and co-sponsored by Senator Osita Izunaso (Imo West).
The Senate was “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, causing severe financial hardship and, in some cases, driving victims to depression, family breakdowns, and even suicide”.
It noted 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.
“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”.
The red chamber was 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).
In their various contributions to the motion, which received overwhelming support of the senators, the Senate Chief Whip, Senator Tahir Monguno (Borno North) said people look at tempting offers that promise quick returns and they easily fall prey.
“So it behooves on us, we the legislators, to also sensitize our people not to patronize these Ponzi schemes, adding that the failure of regulatory agencies is very evident. The CBN, the Security and Exchange Commission, the EFCC, and other regulators are also at fault because they fail to monitor whatever these people are doing”.
Senator Abdul Ningi (Bauchi Central) described the motion as “an extraordinary motion that deals with an extraordinary situation that demands a lot of attention that demands an extraordinary reaction”.
He said the motion has elucidated that even though the acts of the National Assembly have given sweeping powers to the Security and Exchange Commissions, the Central Bank of Nigeria, the Nigerian Financial Intelligence, and the Economic and Financial Crimes, yet these things just take place in Nigeria as if these laws are not in place. These laws are in place, but over the years, this scheme has not happened just this year. It has been happening for over 20 years, even under our democratic experiment”.
“Who are responsible for these Ponzi schemes? Why are they doing these Ponzi schemes and yet no arrest, no sanction? So all these things boils down to us as a people”, Ningi queried.
Senator Solomon Olamilekan, Chairman Senate Committee on Appropriations said the operations of Ponzi schemes have adversely affected the economic activities of the country and must be properly handled to bring them to an end.
He strongly supported the investigative hearing to expose those behind and appropriate punishment meted to them to serve as deterrent.
In his contribution, Senator Adamu Aliero (Kebbi Central) wondered how foreign investors would come to Nigeria if such corrupt tendencies are very rampant.
“Much as we accept that those who found themselves becoming victims to these Ponzi schemes, it is as a result of their gullibility and they also have some responsibility to share. However, as leaders and as a government, we also have a responsibility to use government agencies that are supposed to regulate this to prevent it and stop it at the early stages”.
On the legal case between the government and CBEX, Senator Abiru said “what we are embarking upon is to get to the root cause, so that you prevent future occurrence. The government are dealing on the surface, perhaps they’ve identified some people that have been kind of duped or whatever, that have tried to recover. But what is more important is that you have to learn from that mistake. So, the only way is that you do a deep dive and try to understand it and also see what kind of preventive measures you can put in place.
“There are two different things. We are doing, you know, our deep investigation and prevention mechanism. Federal government and CBEX, they are dragging their own case. There are two different issues here.
