The crash of the digital asset trading platform CBEX has left many Nigerian investors reeling, with reports indicating potential losses exceeding N1.3 trillion.
The platform abruptly halted operations, locking user accounts and freezing withdrawals. Investors were offered a dubious lifeline: a supposed verification process requiring payments of $100 or $200 to unlock limited withdrawals of $1,000 or $2,000, respectively.
Cryptocurrency experts, and cyber security analyst Taiwo Owolabi, have analyzed the situation, revealing suspicious transactions. Large sums of money were allegedly transferred to a specific TRX address (TDqSquXBgUCLYvYC4XZgrprLK589dkhSCf), with estimated losses in USDT reaching $847 million and potentially rising. Owolabi points out that CBEX lacked proper licensing and its website mimicked the design of the legitimate trading platform ByBit, likely to create a false sense of security and facilitate the alleged scam.
The platform’s operations involved users depositing funds into a TRX account, which were then swiftly converted to USDT and ETH. Owolabi alleges that the displayed account balances were merely fabricated numbers, with the platform simulating trading activity to create the illusion of profit. Withdrawals were likely funded using deposits from other investors, a classic Ponzi scheme tactic. This “rob Peter to pay Paul” strategy allows such schemes to sustain themselves temporarily, fueled by new investments and the victims’ own greed.
CBEX promised investors an enticing 100% return on investment within 30 days. This unrealistic promise, coupled with the platform’s deceptive practices, attracted many Nigerian investors. The alleged falsified withdrawal records further masked the underlying issues, preventing users from realizing the fraudulent nature of the platform until it was too late.
The Securities and Exchange Commission (SEC) has issued warnings against such unregistered platforms. Under the new Investment and Securities Act (ISA) 2025, signed by President Bola Tinubu, operating online forex trading platforms or providing related services without prior registration with the SEC is now a criminal offense. The SEC emphasizes the importance of investor protection and market integrity, encouraging entities to register and comply with regulations. The commission’s Director General, Dr. Emomotimi Agama, hailed the ISA 2025 as a crucial step towards a more inclusive and robust capital market in Nigeria, aligned with global best practices. The SEC’s commitment to fostering innovation within a regulated framework aims to prevent future occurrences of similar scams and protect investors.