REGULATION | Nigerian Senate Passes Law Criminalizing Crypto Ponzi and Unlicensed Schemes After ~$5 Billion Lost to Scams

After years of devastating losses to financial scams, the Nigerian government has officially passed a sweeping law that legalizes cryptocurrency and criminalizes Ponzi schemes – marking a major shift in the country’s digital asset and investment landscape.

The newly signed Investment and Securities Act, 2024 (ISA 2024), backed by Senator Osita Izunaso and approved by President Bola Tinubu, empowers regulators like the Securities and Exchange Commission (SEC) to prosecute unlicensed investment schemes and enforce rules on digital assets, virtual asset service providers (VASPs), and exchanges.

“It is now illegal to promote or operate Ponzi schemes,” said Senator Izunaso, noting that offenders face up to 10 years in prison and steep fines.

He also emphasized the Act’s role in legitimizing digital assets, saying it aligns with President Tinubu’s 8-point economic agenda and lays the foundation for building a $1 trillion economy through a revamped capital market.

Nigeria’s Long History of Ponzi Scams

Over the past decade, Nigeria has witnessed billions of dollars lost to fraudulent investment schemes. According to the Senate, over ₦2 trillion (~$4.9 billion) has been wiped out by major scams:

| Ponzi Scheme | Estimated Loss (₦) | USD Equivalent | | --- | --- | --- | | CBEX | ₦1.5 trillion | ~$3.7 billion | | MBA Forex | ₦213 billion | ~$522 million | | Racksterli | ₦147 billion | ~$360 million | | MMM Nigeria | ₦18 billion | ~$44 million |

CBEX, one of the most recent and widespread scams, promised investors AI-powered trading and daily profits. It collapsed in early 2025, prompting investigations by the EFCC and NFIU. Victims were later asked to pay “verification fees” to reclaim their frozen funds – tactics reminiscent of previous scams covered extensively on BitKE.

What the ISA 2024 Changes

Under the new law:

• Ponzi and pyramid schemes are now formally criminalized, with jail terms of up to 10 years.
• Digital assets, VASPs, and exchanges are officially recognized and must register with the SEC.
• The SEC is empowered to investigate, freeze accounts, shut down illegal operators, and compel telecom firms to release subscriber data tied to scam activities.
• The Investor Protection Fund is strengthened to better compensate victims of legitimate investments gone bad.
• New capital market instruments like derivatives and commodities are recognized, helping expand investment options in a regulated environment.

Stronger Protections, Clearer Crypto Regulation

The law is being hailed as a pivotal moment for Nigeria’s crypto space, which has long operated in a gray area. Until now, digital assets lacked proper recognition in the country’s legal framework, even as Nigeria became the top P2P crypto market in Africa.

By bringing crypto under the SEC Nigeria’s umbrella, the ISA 2024 opens the door for:

• Registered and licensed exchanges
• Clarity on taxation and compliance
• Crackdown on fake crypto schemes posing as tech investments
• Alignment with international standards, including IOSCO recommendations on virtual asset regulation

The timing of the law reflects growing interest in leveraging crypto for economic growth. Nigeria is already one of the most active countries in the world for crypto adoption, and the government is signaling its intent to harness that activity – responsibly.

Senator Izunaso noted the ISA will help achieve Nigeria’s target of becoming a $1 trillion economy, especially by deepening capital markets and embracing fintech innovation.

This landmark law comes with a clear message: the era of unchecked financial scams in Nigeria is coming to an end. With the SEC now armed with stronger powers, crypto investors and legitimate operators alike are being encouraged to embrace compliance, transparency, and investor education.

Meanwhile, anyone promoting unlicensed or unregistered schemes now risks serious jail time – a strong deterrent amid a wave of tech-enabled scams sweeping through Africa.

BitKE has extensively covered past Ponzi cases like CBEX, MBA Forex, and InksNation. We continue to monitor policy reforms across the continent aimed at protecting consumers and fostering responsible crypto adoption.

👉 For real-time alerts on scam activity and crypto regulation in Africa, follow our Scam Alerts and Regulation sections.

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