Unregulated online investment schemes in Nigeria: The risks, the buffers

Despite warnings by the Securities and Exchange Commission, many still fall victim to fraudulent investment schemes in Nigeria, writes JULIANA AJAYI

Recalling the promises made by different investment schemes, the enticing offers and the disappointment that came after each trial, Ebuka Eloka, a young man in his 30s, narrated the ordeal of fraudulent investment scheme victims in Nigeria. 

One of the commonest lures in the different online investment schemes, as discovered by victims, is the promise of quick money. They are promised huge profits without having to bear any form of risk while investing. 

Eloka said, “I have been involved in several investment schemes, but I guess they were the wrong ones. At first, I was well convinced by the profits announced; but after accumulating a large number of investors to participate in their scheme, they began giving excuses. 

“They said all manner of things about how the system works. With these excuses, we could not pull out our money. We tried to pull our money out because the feedback from them was not soothing to us; we just couldn’t. The server went down before we realised that we had been defrauded.”

Mr Femi Alaba was promised a half of whatever he invested as profit. To get a rewarding profit, he invested N200,000 expecting N300,000 in return. It took a month for him to realise that he had lost both his principal and interest.

He said, “The name of the company I invested in is Twinkas. I invested N200,000 to collect a 50 per cent Return on Investment. Unfortunately,  after 30 days, I lost the money.”


Investment fraud

Like the Ponzi scheme, investment fraud has long been in existence. With a promise of sudden wealth and overnight success, perpetrators of investment fraud continue to lure people using different formats. 

With no form of regulation of assets, more people are being swindled by fake investors claiming to be crypto agents. They come with different enticing offers to those without knowledge of crypto. 

Some of the perpetrators of these acts sometimes promote adverts on social media with a promise of higher returns after using their platform to trade. Clicking on such adverts is dangerous, as this could lead to one entering the trap. If clicked, the user is directed to a fake website with information on how one could trade on their platform. 

According to the Australian Competition and Consumer Commission, some of these acts are carried out by encouraging people to buy crypto through an exchange or requesting people to send money to a company for them to do so on their behalf. Following this event, they make a claim afterwards to trade on their victims’ behalf or coach them to trade themselves. 

Accepting to do all of these allows the victims to see the profits they claim to have made on a webpage, application or custom MetaTrader platform. However, in reality, the data shown are fake. The data is to have the victim send more money.

In the long run, the victims are unable to withdraw any money; they are then sent packing from the platform without any means of contacting the investment company.


Even forex

In addition to crypto, foreign exchange trading and investment have been used to rob people of their wealth. Towards the end of June 2020,  an investment company, Intelligence Prime Capital, introduced three Artificial Intelligence robots to Nigerians, which it claimed was capable of trading the financial market on their behalf. Following its introduction to newbies, as well as experienced forex traders, many people embraced the innovation, as well as benefits and opportunities it offered, primarily through its referral option. 

When it became clear that the money invested by the people had gone down the drain, some of their Nigerian agents were still in denial. Zoom sessions were still being held to reassure the people of their investments. 

Some individuals confirmed that they had made some withdrawals since they started investing. However, their principal and profits had been on hold since March this year. 

Among those that counted losses in the investment scheme is Olasunkanmi Toheeb, who noted how IPC had been the only platform among many others he trusted. 

His words, “I trusted that platform so much, like no other in my life. That is the only online investment platform I’ve ever trusted. But I never expected it. I got scammed of the over $600 I invested. I had grown my money to almost $1,000 before I realised that I had been scammed, without anything to do about it. 

IPC operated by presenting three AI bots – smart bot, brilliant bot and genius bot. Many went with the genius bot, which offered between 1.5 and two per cent RoI daily. 

Investors were encouraged to subscribe with a one-time payment of $19.9, $39.9 or $99.9 for either a smart, brilliant or genius bot with $100 minimum capital. 



Knowing that money doesn’t grow on trees or overnight has helped a lot of people avoid taking negative risks. Education on how to invest wisely and position oneself for the right opportunities is recommended for investors. 

To avoid falling victim to fraudulent investment schemes, it is important to check the body regulating the investment company, and ensure it is registered with the Securities and Exchange Commission. 

A Nigerian investor, Michael Adeleke, explained, “Checking a company out online isn’t enough; it is important that people visit their physical addresses and conduct proper investigation before investing in them. 

“Sometime ago, I wanted to invest with an agrotech company, but before I did that, I checked them out online and visited one of their branches close to my office.” 

The SEC, in creating awareness of unregistered companies acting as investment companies, issued a statement in March notifying members of the public of some companies unregistered by SEC. 

According to the statement, Oxford International Group/Oxford Commercial Services, Famforte Agro Allied Solutions Limited/Agropartnerships and Vektr Capital Investment/Vektr Enterprise had their offices shut on March 14, 2022 by the SEC. 

The statement partly reads, “The commission hereby notifies the investing public that none of these entities is registered by the SEC and the investment schemes promoted by them are also not authorised by the SEC.

“The commission warns that it is unlawful for any private enterprise, whether incorporated as a company or not, to solicit fund from the public by whatever means for its private ventures in contravention of the Investments and Securities Act, 2007.”

It advised the general public to always confirm from SEC whether an entity providing investment services has been duly registered and investment scheme authorised by the commission.

“Any member of the investing public dealing with the entities is doing so at his/her own risk,” it warned.

Another Nigerian investor, Godwin Tobiah, explained that using a celebrity to endorse investment schemes has landed some people in trouble. 

“I’ve never been a fan of online investment because most people that push for it do so majorly because of the commission they earn. But last year, I fell for one, Racksterli, simply because it was endorsed by a top celebrity in Nigeria who said ‘Racksterli is here to stay.’ That alone was enough reason for me to invest.

“They had different packages: Standard, Premium, Platinum, Gold, Diamond and so on. What I invested in was Diamond, which was N280,000 to earn N444,600 after a month. Yeah, I know the return was pretty much; however, it was a risk I was willing to take,” he said.

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