A middle-aged Emmanuel Faith wasn’t cognizant of what could double his stipend until he had a rivalry with an older brother who woke him up to an online gamble platform named 86FB — Ponzi scheme, some weeks ago. Thus, he snickered to himself, wondering how small funds would be conserved within some days, and would automatically increase.
“We were together a couple of weeks ago, and then he told me about the online gamble he’s been doing for a while. He said that this betting platform is called 86FB; where a person never loses a game and even if I lose, my initial capital would remain the same,‘’ said Faith.
‘’Although, I laughed at him, saying how it is possible to save money within some time and it will increase.’’
Faith unwrapped his mouth in full awe when his older brother opened his dashboard that’s smiling cash.
He, however, sent Ten Thousand Naira (N10,000) for him to save in his new account on his behalf. After some week, Faith had been trying to withdraw his money but the platform was no longer working again.
“He showed me his dashboard, there was a whole lot of money, and then he also told me about how his friend cashed out a few days ago. I believed him completely, opened an account in front of him, and sent my own “investment money” (N10,000) to him straight up so he could help me add it to my dashboard. Since then, I have been trying to withdraw my money but the platform no longer exists,’’ he concluded.
A Ponzi scheme is a financial structure in which investors contribute money to a portfolio manager who promises a high return and is paid out with cash supplied by later investors.
Over 2,000 speculators lost N900 million to Yuan Dong Ponzi, according to the Guardian newspaper, out of the N300 billion lost by millions of Nigerians to ponzi schemes in recent years.
In addition, Galaxy Transport Ponzi schemes duped victims of N7 billion, while Famzhi Interbiz Limited lost N2 billion.
Nigerians who put money into Cowlane and Dureil lost N100 million in each case.
How an investor outsmarts online scammers
A crypto trader and realtor, Isaac Adedoyin disclosed how he got engaged in some of the Ponzi schemes and how he plays once and withdrew — without investing again.
“There are many Ponzi schemes like Mybonus, Elancie, Prime Vault, Uwork, Racksterli, and OpenCart,” Adedoyin said.
He said Elancie, Prime Vault, and Open Cart are crypto-based. So, if I cash out first, I make sure to never reinvest my capital. In fact, take out some profit and eat suya with it because the next return is not promised.
He also claimed that one of the factors that lured Nigerian youths into those online schemes was that online business platform owners are using Nigerian celebrities as their brand ambassadors.
“People want to believe that since a celebrity is endorsing it, even though they don’t invest, it is legit. They trust them, but in the end, many people get scammed,’’ he added.
How Nigerians can avoid being scammed by Ponzi schemes
Analysts at the Nairametrics Clubhouse Series, which was hosted by the founder, Ugo Obi-Chukwu, on Saturday, October 23, 2021, were dismayed by the recent rise in Ponzi scheme-related frauds. They also advised Nigerians to avoid dubious ‘investment opportunities’ that appear too good to be true, stressing that such schemes are common during economic downturns in most poor countries.
In a report published by Nairametrics, Olumide Adesina, another financial expert, said, “The easiest way to avoid Ponzi scheme players is empowering yourself with investment education and knowing when to contact the Nigerian SEC or a regulated financial entity for advice.
“Also, before an investor considers putting funds in any scheme, one should check the historicals of that entity, background checks should be done on founders to verify whether they are legit. Finally, an investor should not be overly exposed to investments that carry substantial risks.”
Nigerian government’s efforts to curb Ponzi schemes
According to a report Published by Premium Times, the Nigerian Capital Market, Investments, and Securities Act were repealed and re-enacted by the House of Representatives on the second reading.
The bill was endorsed by Ibrahim Babangida, Lawmaker representative from Kano State. The law aims to prohibit Ponzi schemes and other pyramid investments.
Mr. Babangida said that the bill seeks to enable the Nigerian Security and Exchange Commission (SEC) to shut down prohibited investment schemes in order to combat the threat of Ponzi schemes.
He also claims that the law contains sufficient provisions to improve investment scheme regulation and effectively prevent the spread of Ponzi schemes in Nigeria. It also intends to implement new provisions to control the actions of financial market infrastructure, as well as netting and bankruptcy protections to protect derivatives contract investors, according to the lawmaker.
When the Speaker, Femi Gbajabiamila put the bill to a vote, the lawmakers unanimously supported it. If the bill is passed and the promoters are convicted, they might face ten years in imprisonment.