Four red flags Nigerians ignored until CBEX crashed

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Sunday Awosoro

It has not been a pleasant week for thousands of Nigerians who have again fallen for another money scam.

Several persons on various social media platforms have begun to count their losses as CBEX, a popular digital asset trading platform, reportedly wiped out over N1.3 trillion from Nigerian investors’ accounts. The platform collapsed after funds disappeared from users’ wallets, withdrawals were postponed, and communication channels were locked.

Taiwo Owolabi, a security analyst, recently released an analysis showing how investors’ funds were diverted through funnel wallets and finally into a central wallet, which now holds a total of $857 million in USDT. 

The security expert concluded that CBEX was just another Ponzi scheme.

When CBEX promised a mouth-watering 100 per cent return on crypto investments in 30 days, many Nigerians rushed to invest just like they did with the defunct MMM. However, despite the crash, CBEX has asked some investors to pay $100 and $200 verification fees to access partial withdrawals.

Now that the chips are down, it’s time to ask: “How did we not see this coming?”

Below are four red flags about CBEX that investors ignored. 

1. No regulatory approval

CBEX operated without registration or approval from the Securities and Exchange Commission (SEC) or the Central Bank of Nigeria. Still, many Nigerians invested, assuming legitimacy because the platform looked flashy. This has become a pattern, as in previous cases where Nigerians got duped, the platforms were unregistered.

SEC has since warned Nigerians against investing in unregistered online forex and digital asset platforms, saying that operating such businesses without registration is now illegal under the new Investment and Securities Act (ISA).

Lesson: Always verify a platform’s regulatory status before putting your money in. 

2. Anonymous founders

CBEX’s website and Application did not list identifiable owners or executives. To gain credibility, CBEX masqueraded as a crypto platform, talking about “blockchain,” “trading bots,” and “AI-powered systems.” However, it had no verifiable trades or links to legitimate crypto exchanges. It used tech jargon to mislead its users.

Lesson: Transparency is a minimum requirement. If you don’t know who runs it, don’t trust it.

3. Unrealistic returns on investment, withdrawal issues 

While there is no ideal return on investments (ROI), excessively high ROIs or ones that appear too good to be true are usually a call for caution.

CBEX promised investors returns of up to 100 per cent in 30 days. That looks like a classic Ponzi red flag. As seen in the past, these kinds of returns are unsustainable, but they remain effective bait that can appeal to anyone’s greed.

At first, CBEX worked. Users were getting paid even though Owolabi claimed the platform initially used one investor’s money to pay another until it could not. 

Just before the crash, many users reported delays in withdrawing their funds. CBEX blamed this on “system upgrades” and “network issues,” which is a tactic common with failing schemes.

Lesson: High, guaranteed returns are a red flag, and consistent withdrawal delays indicate that the system is drying up. That’s usually when the exit strategy begins.

4. Influencer endorsements and peer pressure

The Fear Of Missing Out (FOMO) does not respect age, especially when influencers, friends, and families are involved. However, the misuse of trust through misinformation is common in fraud schemes.

CBEX’s biggest marketing weapon was social media hype and word-of-mouth pressure. The platform relied heavily on trust networks.

From WhatsApp statuses to Facebook pages and TikTok videos, CBEX grew viral through a coordinated network of testimonials. People shared real and fake proof of payment screenshots and emotional success stories.

When friends and family members innocently vouched for it, people ignored other red flags and pumped money into the scheme.

Lesson: Social proof is not due diligence. Always investigate platforms independently, even if people you trust are involved.

Conclusion

CBEX’s collapse is not new; unfortunately, it may not be the last. DUBAWA urges investors to adopt a fact-checking mindset when approached with financial opportunities. Scams thrive on ignorance and trust. Our best defence is verification, not hope.