THE recent decision by the Federal High Court in Abuja, which granted the Economic and Financial Crimes Commission (EFCC) the authority to arrest and detain six promoters of Crypto Bridge Exchange (CBEX), shines a stark light on the recurring investment fraud in Nigeria.
This case, which involves alleged fraudulent activities amounting to over $1 billion, underlines a disturbing trend that has seen countless Nigerians fall victim to fraudulent schemes masquerading as legitimate investment opportunities.
According to the EFCC’s motion, the six individuals involved in this case promoted a fraudulent investment scheme under the guise of CBEX, attracting unsuspecting investors with promises of up to 100 per cent returns on their investments.
The victims were encouraged to convert their digital assets into stable coins and deposit them into the suspects’ crypto wallets. Initially, the investors had full access to their investments, but when the scheme reached a critical point, the platform became inaccessible, and the investors found themselves unable to withdraw their funds.
The case reveals a well-coordinated scam in which those behind it evaded the scrutiny of regulatory bodies like the Securities and Exchange Commission (SEC), which oversees investment activities in the country.
The fact that such fraudulent schemes could operate with relative ease reflect the gaps in Nigeria’s regulatory and law enforcement systems. With cryptocurrency being a relatively new and complex asset class, the government has failed to implement robust regulations to control such activities, allowing these scams to grow unchecked.
This case is not an isolated incident, however. As far back as the 1990s, Nigeria experienced a rise in various fraudulent schemes as Arise and Shine Investment Limited, Planwell Ltd, which promised massive returns to investors.
Even more troubling is the involvement of religious leaders in promoting such schemes, often through church platforms, which gives some legitimacy to the fraud in the eyes of the public. Such fraudulent ventures are equally advertised heavily on the radio, social media, and even at public gatherings, further promoting them among the citizenry.
Unfortunately, the failure of government to effectively tackle this issue has not helped matters. While the SEC and other government agencies are responsible for regulating investment activities, many companies continue to operate outside of the law with minimal or no consequences.
This lack of accountability, compounded by widespread corruption, has allowed these fraudulent schemes to flourish, with only the early investors benefitting while the majority of victims face financial ruin.
The root causes of these scams emanated from the broader socio-economic challenges facing the citizenry. An endless prostrate economy, high unemployment, and a general desire for quick financial gains have created a perfect environment for such fraud to thrive.
The promises of instant wealth resonate with many, especially in a country where economic opportunities are limited, and the desperation of the youth for financial independence is unarguable. However, the reality is that these schemes rarely deliver on their promises, often leaving their investors worse off than before.
Nigerians must understand that in the world of investment, there are no shortcuts to success and quick schemes that promise outsized returns are too good to be true.
In the light of this, the government and financial regulators must take a more proactive approach in curbing these fraudulent activities. They should ensure that companies, especially those in emerging sectors like cryptocurrency, are properly vetted and registered with the appropriate regulatory bodies.
Additionally, a concerted effort is needed to educate the public on the risks of these schemes, highlighting the importance of due diligence and encouraging responsible investment practices. Financial literacy campaigns will go a long way in preventing future victims from falling prey to these fraudsters.
Moreover, the government must also address the broader issue of corruption that enables these fraudulent enterprises to thrive. Many of these scams operate with the tacit approval of local authorities which often turn a blind eye due to personal gains or political pressure. It is essential that law enforcement agencies, such as the EFCC, are adequately empowered to investigate and prosecute perpetrators of these schemes without fear or favour.
It is only by tackling both the symptoms and the root causes of fraud can we ever hope to create a safer and more transparent financial environment for Nigerians.
