SEC’s Fight Against Nigerians’ Penchant For Ponzi Schemes

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In a warning that reflects a persistent national crisis, the Securities and Exchange Commission (SEC) has once again raised the alarm over Nigerians’ unrelenting attraction to fraudulent investment schemes.
The latest caution came last week as the Commission urged the public to steer clear of Punisher Coin, a cryptocurrency it described as unauthorised, unregulated, and bearing all the hallmarks of a Ponzi scheme.
SEC, in a statement, warned that the promoters of Punisher Coin, also known by the symbol $PUN, are not registered to operate in any capacity within Nigeria’s capital market, saying, “Our attention has been drawn to online promotions of an unauthorised presale for a cryptocurrency called Punisher Coin.”
The statement had been issued following a promotional article positioning the coin alongside legitimate digital assets like Avalanche and Chainlink. The Commission’s preliminary investigation revealed that $PUN is a meme coin, a type of digital asset often lacking any inherent utility or business model.
According to the SEC, such coins derive their value almost entirely from hype and speculative fervor, making them ripe for “pump and dump” schemes. In these scams, promoters create buzz, inflate the price, and exit with substantial profits, leaving unsuspecting investors to suffer steep losses once the hype collapses.
“These coins’ value is largely based on manipulation, not substance. The public is therefore strongly warned against participating in the presale of Punisher Coin, as any investment is entirely at one’s own risk,” SEC said.
The caution against Punisher Coin is only the latest in a long series of warnings from the SEC. Despite continuous public education efforts, millions of Nigerians have fallen victim to Ponzi schemes over the years. From the infamous Mavrodi Mundial Movement (MMM), which collapsed in 2016 with N18 billion in Nigerian losses, to more recent debacles like CBEX, in which nearly 600,000 people were reportedly involved, the financial damage has been staggering.
According to the Norrenberger Financial Investment report, Nigerians lost over N300 billion to Ponzi schemes between 2017 and 2022 alone. Head of the SEC’s enforcement department, Dr. Sa’ad Abdulsalam, speaking in Lagos had voiced his frustration saying, “There are many credible products for people to invest in. But most people are looking for very high returns. That is why I see people patronising Ponzi schemes.”
To him, a lack of awareness and an insatiable hunger for quick wealth are key drivers behind Nigerians’ vulnerability. “There are mutual funds, there are non-interest funds, there are Islamic mutual funds, all vetted by the SEC. Just go to the internet, and you will find them,” he said.
However, the promise of impossibly high returns, which can sometimes run up to 30 per cent in a week, continue to seduce investors. A case in point is Property World Africa Network (PWAN), whose PWAN MAX platform reportedly offered investors annual returns of 30 per cent on land deals. The SEC recently declared the company’s operations as resembling a Ponzi scheme, noting that it was not registered to operate or solicit funds from the public.
“PWAN’s operations exhibit the typical indicators of a fraudulent Ponzi scheme, including the promise of unusually high returns and failure to honour withdrawal requests from subscribers,” the commission warned.
The consequences of these fraudulent schemes go far beyond financial loss. “These losses are not just figures on a balance sheet. They represent broken trust, devastated livelihoods, and increased poverty in affected communities,” Abdulsalam explained.
Moreover, the proliferation of these scams has damaged investor confidence in Nigeria’s formal capital market. “The erosion of market confidence caused by Ponzi schemes leads to significant volatility and reduced investor engagement. The fallout not only damages individual finances but also tarnishes the reputation of regulatory institutions,” he said.
To combat the growing scourge, the Nigerian government has taken a firmer stance. Under the newly signed Investments and Securities Act (ISA) 2025, Ponzi schemes are now explicitly outlawed. According to SEC director-general Emomotimi Agama, operators found guilty face up to 10 years in prison and fines of N40 million.
The SEC is also working closely with other government agencies like the Economic and Financial Crimes Commission (EFCC). Abdulsalam disclosed ongoing discussions about revising the format of the Special Control Unit Against Money Laundering (SCUML) certificate, a document some fraudulent operators misuse to feign legitimacy.
“Because the certificate carries EFCC on top, most believe they can use it to give a colouration of legitimacy to their business. But EFCC does not know about them. SCUML is just a unit,” he said adding that the Commission is exploring digital codes and verification systems to replace the current format.
Ponzi schemes are easy to spot for those that are discerning. According to investment professional Ayodeji Ebo, there are several red flags to watch for. To start with, any investment promising returns significantly higher than treasury bills or commercial papers should be viewed with skepticism. Monthly returns of 10 per cent or promises to double your money in six months often signal fraud.
Another is guaranteed profits. Except for regulated fixed-income instruments, no investment should guarantee returns. Even mutual funds do not promise profits. Also, weekly or monthly payout structures are often used to bait investors. Legitimate investments typically have quarterly or annual returns.
Asides this, any firm offering financial products to the public must be registered with the SEC. Simply having a Corporate Affairs Commission (CAC) registration is not enough. Another rule of thumb is that if a company cannot clearly explain how it generates revenue, it is most probably a scam. Most Ponzi schemes use vague or confusing jargon to cover up their fraudulent nature.
While regulation and law enforcement play crucial roles, experts agree that public vigilance remains the most effective line of defense. “Greed is often the investor’s greatest enemy,” Ebo warns. “If it’s too good to be true, it probably is.”
As Nigeria moves forward under a stricter legal regime, the fight against Ponzi schemes is far from over. But with better awareness, informed decision-making, and stronger enforcement, there’s hope that fewer Nigerians will fall into the traps set by get-rich-quick artists — and more will turn to the safe, regulated pathways to wealth the SEC has long championed.