Over the past 50 years, Nigerians have lost billions of naira to Ponzi schemes, beginning with community‑driven cons in the 1980s and extending to sophisticated crypto‐driven scams in 2025. These frauds exploit economic hardship, social networks, and gaps in regulation to lure millions with promises of unattainable returns. In this article, we delve deeper into five watershed moments—from Umama‑Umama’s oral legacy to the most recent CBEX’s collapse—highlighting what went wrong and how to guard against the next wave(You just might be next).
1. Umama‑Umama & Planwell – The Grassroots Ghosts (1980s–1990s)
In the mid‑1980s, the Umama‑Umama scheme spread by word of mouth across Calabar, offering community members a share of “donations” collected in village gatherings. With no written contracts or formal oversight, early investors pooled meager savings in hopes of quick gains—only to see payouts dry up and promoters vanish. A few years later in Edo State, a new ponzi scheme called Planwell promised guaranteed profits from bulk trading arrangements, but reports revealed no actual business—just a classic pyramid structure where new contributions paid earlier backers(robbing Peter to pay Paul). These first chapters left scars on social trust and laid bare the critical need for financial literacy.
2. MMM Nigeria – The Original Monster (2015–2016)
When Sergey Mavrodi’s “Mavrodi Mundial Moneybox” (MMM) launched in Nigeria in mid‑2015, it promised 30 % monthly “gifts” between users, requiring no product or asset backing. Its peer‑to‑peer simplicity and early payouts drew over 3 million participants, who traded real estate and sold valuables to join the networks. By December 2016, MMM froze withdrawals, and the NDIC estimated losses of around ₦18 billion (∼US$50 million). The scheme’s dramatic trends revealed how gaps in digital regulation and mobile‑money proliferation can amplify risk.
3. Loom Money – The WhatsApp Web of Lies (2019)
In May 2019, the SEC publicly warned against Loom Money Nigeria, which promised up to 800 % returns in just 48 hours via WhatsApp and Facebook recruitment. Investors as young as students joined with as little as ₦1 000, believing in “eight‑fold” windfalls funded entirely by new entrants’ fees. Despite the SEC’s urgent advisories, thousands had already deposited funds when the administrators abruptly ceased communications and group chats vanished—underscoring how viral marketing can outpace regulatory response.
4. Racksterli – Influence Meets Insolvency (2021)
By 2021, celebrity‑backed Racksterli claimed to double investments in minutes, fueled by endorsements from stars like Davido. The platform’s CEO, Michael Oti, boasted of plans to liquidate assets to honor payouts, but in June 2021 the site crashed, leaving subscribers stranded and losses exceeding ₦1 billion. Investigations revealed tier‑based referral bonuses with no underlying business model—classic hallmarks of Ponzi mechanics masked by influencer gloss.
5. CBEX (CryptoBank Exchange) – The Illusion of Innovation (2025)
In April 2025, CBEX, a self‑styled “AI‑powered” crypto exchange, collapsed after promising 100 % monthly returns. Thousands of investors across Nigeria allegedly watched over ₦1.3 trillion vanish into a private Ethereum wallet, with offices in Ibadan looted and some participants hospitalized from shock. Despite obvious red flags on display on halted withdrawals and unregistered status, CBEX’s glossy app and “verification fee” tactic kept new money flowing until the crash, illustrating how digital sophistication can cloak age‑old fraud.
From Pain to Prudence
From the mouth to mouth marketing of Umama‑Umama to the “AI” backed CBEX, Nigeria’s Ponzi story is one of evolving tactics and recurring vulnerabilities. Key pointers we should always consider is:
- Verify Registration: Always confirm platforms with the SEC or CBN.
- Question Extreme ROIs: If it promises unreal returns (>20 % annually), it’s almost certainly a scam.
- Beware Recruitment‑Driven Models: Legitimate investments generate returns from real assets, not new deposits.
- Champion Financial Literacy: Community outreach and education remain our best defenses against the next “too‑good‑to‑be‑true” promise.
By understanding these episodes, Nigerians can fortify themselves against the next wave of deceit—because as long as “easy money” glitters, the dance with the Ponzi gods continues.
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