Almost a decade after Sergei Mavrodi’s MMM’s ponzi scheme swindled thousands of Nigerians and other Africans of their money, CBEX, another pyramid scheme disguised as a digital investment platform using AI in trading crypto for investors, duped Nigerians, with many losing their savings.

MMM indicated it was a Ponzi scheme that rewards investors with 30 per cent of their capital in 30 days. It ran on investors “Giving Help” until it collapsed.

To lure the unsuspecting public, CBEX avoided being regarded or seen as a Ponzi scheme, projecting itself as a digital trading investment platform, doubling the deposit balance of investors within 40 days.

With physical offices in some cities, CBEX operators claimed the scheme was deploying AI technology to trade only one per cent of its investor’s balance twice daily to mitigate the risk of losing all funds. However, after operating for a while, the Ponzi scheme crashed and eloped with investors’ funds.

To mitigate the reoccurrence of Ponzi schemes luring and defrauding the public, Peoples Gazette listed some red flags for people to look out for to avoid falling prey to fraudulent Ponzi scheme operators.

1. Ponzi schemes, like MMM and CBEX, lure their victims with huge returns on investment without showing any tangible or material product or services they are trading. The very high returns on investment offered by the Ponzi scheme usually trigger participants’ greed.

2. The first set of participants are often well-rewarded to increase their greed and encourage them to invest more funds, while their testimonials bait more people to join the scheme.

3. Investors’ funds are usually trapped in the hands of Ponzi operators for several days. In the case of MMM, it was a 30-day window, while CBEX’s was a 40-day window. Within this period, investors do not have control over their funds and cannot withdraw them. This is why many cannot do anything once the scheme is about to crash.

4. All about profit and no loss. Ponzi schemes do not inform their investors of possible losses. Investors are only made to believe and focus on making a profit, a mirage that never existed in business, trading anywhere in the world.

5. More Ponzi schemes are now masquerading as crypto trading platforms, seeing many lack deep knowledge of how crypto trading works.

6. Ponzi schemes deploy fake testimonials crafted to promote their brand. Such articles and promotional videos are usually published on social media and their websites to convince people to invest.

7. Ponzi operators coordinate day-to-day interaction with investors via faceless Telegram and WhatsApp groups dominated by their agents, who always share screenshots and details of their successful transactions on the platform to sway people to invest more funds.

8. Salacious bonuses: Ponzi schemes offer their investors unreasonable financial bonuses and rewards. Referral bonuses motivated participants to get more people to join the scheme through their referral code. Daily bonuses are also made available to engage with the platform or perform some tasks.

9. Ponzi schemes operate as unregistered entities: In Nigeria, they are never registered with the Corporate Affairs Commission or any financial regulatory agencies. This makes it impossible for them to be sued.

10. Aside from Mavrodi, who pushed MMM with his real identity, other owners of Ponzi schemes usually operate anonymously. A trick that makes it difficult for swindled investors to seek legal redress.