Thousands of Nigerians who invested in CBEX, a self-proclaimed secure and transparent digital trading platform, woke up on Monday morning to discover, to their chagrin, that the platform has crashed.
Besides emptying investors’ wallets, CBEX also froze all withdrawal options and locked its Telegram channels.
It then introduced what it called “verification” phase, demanding $100 from investors with balances below $1,000, and $200 from those with higher amounts, in the guise of helping them recover their funds. It was all a scheme to perhaps extract more money from desperate victims with which i, possibly to pay a few and sustain the illusion of credibility, while the majority are left defrauded.
Most investors who lost their money rushed to social media platforms to lament their losses. But in Lagos and Ibadan, Oyo State, angry investors resorted to self-help.
On Tuesday, aggrieved investors besieged CBEX office at Seliat Bus Stop in the Egbeda-Idimu area of Lagos State in protest, with many attempting to force their way into the compound.
In Ibadan, it was a chaotic scenario as an angry mob attacked CBEX office in Oke Ado and looted furniture and other valuables.
Earlier analysis put investors’ losses to the collapse of CBEX at N1.3 trillion ($822 million). Techpoint Africa, however, estimates a loss of $6.1 million based on deposits tracked to wallets and smart contracts connected with CBEX. It also said there was no way to confirm if these deposits were made by only Nigerians.
What to know about CBEX
CBEX, full name Crypto Bridge Exchange Smart-Treasures, may have proved itself to be a Ponzi scheme reminiscent of MMM of a few years ago.
The platform, which operated without legal approval from Nigeria’s Securities & Exchange Commission (SEC), lured users with promises of a 100% return on investment within 30 days.
Information on its website describes CBEX as a cryptocurrency exchange registered in the United States with claims that it is certified by the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Techpoint Africa reports that the company is on the FinCEN’s list of registrants, though FinCEN issued a disclaimer that the inclusion of a business on its registrant’s list does not prove the legitimacy of the business.
Apart from its FinCEN registration document, CBEX published more than three documents to prove its legitimacy, including one allegedly signed by the Secretary of State in Colorado, US.
Mode of operation
On the surface, CBEX presented itself as a reputable digital trading platform with a poorly designed website that mimicked reputable platforms like ByBit to appear legitimate and gain users’ trust.
In reality, however, it ran like a typical Ponzi structure, robbing Peter to pay Paul, that is, using new investors’ funds to pay earlier ones in the guise of returns.
It ran a fraudulent and deceptive process, allegedly displaying fake withdrawal records to cover up the issues users faced when trying to access their funds.
According to reports, user funds disappeared almost immediately after deposit, meaning investors never truly owned or accessed the digital assets they believed they were trading. Also, behind the scenes, investors’ deposits were reportedly funnelled into a TRX (Tron) wallet, quickly converted to USDT and then ETH. What then appeared on users’ dashboards were fake balances — artificially generated figures showing fictitious AI trading profits.
