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This report explores how the enactment of the Investment and Securities Act (ISA) 2025 not only sanitises the financial sector but may also be the end of the journey for ponzi schemes in Nigeria, reports Nigerian Tribune.
On March 31, President Bola Ahmed Tinubu signed into law the Investment and Securities Act (ISA) 2025, to expand the Securities and Exchange Commission (SEC) regulatory powers to meet the standards of global bodies such as the International Organisation of Securities Commissions (IOSCO), marking a major milestone in Nigeria’s capital market reform.
The legislation, which not only repealed the former Investments and Securities Act No. 29 of 2007, aims at strengthening the legal and regulatory framework for investments and capital market activities within the country and has been said to bring it up at par with global best practice as well as the developments that have taken place in the Nigerian Capital Market over the past 18 years.
SEC described the presidential assent as a “transformative step” toward enhancing investor protection, improving market transparency, and fostering sustainable growth, adding that the enactment of the ISA 2025, according to the Commission, reaffirms its authority as the apex regulator of Nigeria’s capital markets and introduces significant reforms designed to align local operations with international best practice.
And while it has been described as the most important investment law Nigeria has passed in nearly 20 years, it isn’t good news in some quarters especially for ponzi scheme operators who will be at the receiving end of the provisions of the new law which has created a regulatory framework for digital assets, positioning Africa’s most populous nation to leverage on a fast-growing segment of global capital markets to ‘revolutionise’ its economy, create wealth and lead the pack in block chain technology.
While the ISA 2025 empowers the Securities and Exchange Commission (SEC) to oversee digital assets, virtual asset service providers (VASPs) and tokenised securities, it also brings clarity to a space that has operated in a legal grey area for years.
Amid the celebration that followed the enactment of the law in finance industry, many schemes may be about to go down. And this will affect many in Nigeria where ponzi schemes seem the order of the day. Ponzi schemes are investment frauds that involve payment of purported returns to existing investors from funds contributed by new investors; operators often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.
Often, these schemes are known to yield uncharacteristically high returns on investment based majorly on massive hunt for admission of new members with focus on attracting new money to make promised payments to early-stage investors to create the impression that investors are profiting from a legitimate business.
Operators simply invite the public to deposit or pay money to them with the promise of multiplying or paying it back within a specified period of time with certain percentage interest and the scheme with little or no legitimate earnings, requires a constant flow of funds by new investors, in order to sustain the investment. In the absence of new investors, a vacuum occurs in the flow of funds, leading to the collapse of the investment.
While the legality of Ponzi scheme has been a source of discourse, the schemes continue to thrive in this era where many people are interested in making quick money or have the get-rich-quick syndrome and would do anything to have money and also sustain themselves.
With the collapse of such schemes, the schemers may not be sued as their schemes are often done underground and there are no legal frameworks to support those who had lost their investments. However, in spite of this, people remain unruffled whenever there is a new scheme.
Warnings
Early in the year 2020, the Security and Exchange Commission (SEC) warned stakeholders and the public on the activities of promoters of fraudulent schemes in the country and even listed some of the unlawful/unlicensed market operators/fraudulent investments: Loom Nigeria Money, Box Value Trading Company Ltd, Now-Now Alert, Flip Cash Investment, Result Investment Nigeria Limited, Helping Hand and Investment, No Failure Development and Empowerment Nigeria Ltd, MBA Forex and Investment Ltd, Federate Investors and Trading Company, Jamalife Helpers Global Ltd, Flexus Global Solutions and Investment Ltd and United Capital Investment Company Limited.
Also on July 31, 2024, it was reported that ponzi schemes have defrauded Nigerians of over US$1 billion (₦500 billion) in the past decade. The most infamous scheme across Africa, MMM, attracted over three million Nigerian subscribers, who collectively lost about US$50 million (₦18 billion) when it crashed in December 2016. MBA Forex, a homegrown scheme that promised 15% returns, defrauded Nigerians of about US$500 million (₦213 billion) when it folded in 2021. This accounts for nearly 50 percent of the total funds lost to Ponzi schemes in Nigeria in 10 years.
SEC asserted that over 70 percent of the cases it handles are related to Ponzi schemes which thrived due to myriad of reasons: quest for easy cash and financial illiteracy, economic hardship and weak regulatory laws and poor enforcement mechanisms. And while it is not the first of its kind, MMM unveiled the general vulnerabilities of Nigeria’s investment market and ushered in myriad similar peer-to-peer donation schemes like Loom Money and Twinkas. Loom Money was reported globally with names such as ‘Loom Circle’ and ‘Blessing Loom’.
In Nigeria, Loom Money operated via Facebook and WhatsApp in 2019, promising 800 percent returns on investments in 48 hours and it crashed the same year.
Later, some local schemes such as Racksterli, Wales Kingdom Capital Limited, Quintessential Investment Company and No Burn Global Limited emerged. However, the most prevalent which affected the most Nigerians between 2019 and 2021, were the packaged agricultural crowdfunding investments which involved raising funds from the public without the obligation of repayment to obscure their intentions.
In January 2021, some agricultural schemes began defaulting on payments and SEC issued a guideline insisting that crowdfunding schemes be registered within 90 days or cease operations by June 30, 2021. Most of them failed to register, defaulted on payments and eventually folded up.
And now, new schemes disguised as investments in crypto trading are emerging and operating like Ponzi schemes.
And before the ISA 2025, there was a major regulatory gap; the Investment and Securities Act 2007 does not explicitly prohibit Ponzi schemes. Rather, Ponzi schemes are illegal because they are not registered with the SEC.
On March 11, 2025, the Economic and Financial Crimes Commission (EFCC), through its Head of Media and Publicity, Dele Oyewale, in line with its commitment to sanitising the financial space of the nation and offer the investing public adequate and reliable information on the activities of illegal ponzi scheme operators across the country, alerted Nigerians to the operations of 58 companies posturing as investing entities and defrauding innocent Nigerians of their hard-earned money.
It said the companies are neither registered with the Central Bank of Nigeria (CBN) nor the SEC, which are the two regulators, emphasising that the Commission has charged many of the companies to court, with five of them convicted while another five pleaded guilty but they are awaiting review of facts while the rest are pending arraignment.
EFCC listed illegally operating companies to include: Wales Kingdom Capital, Bethseida Group of Companies, AQM Capital Limited, Titan Multibusiness Investment Limited, Brickwall Global Investment Limited, Farmforte Limited & Agro Partnership Tech, Green Eagles Agricbusiness Solution Limited, Richfield Multiconcepts Limited, Forte Asset Management Limited, (Biss Networks Nigeria Limited, S Mobile Netzone Limited, Pristine Mobile Network), Letsfarm Integrated Services, Bara Finance & Investment Limited, Vicampro Farms Limited, Brooks Network Limited, Gas Station Supply Services Limited, Brass & Books Limited, (Annexation Biz Concept & Maitanbuwal Global Venturescrowdyvest Limited,) and Crowdyvest Limited.
Others are: Jadek Agro Connect Limited, Adeeva Capital Limited, Oxford International Group and Oxford Gold Integrated, Skapomah Global Limited, MBA Trading & Capital Investment Limited, TRJ Company Limited, Farm4Me Agriculture Limited, Quintessential Investment Company, Adeprinz Global Enterprises, Rockstar Establishment Limited, SU. Global Investment, Citi Trust Funding PLC, Farm Buddy, Eatrich 369 Farms & Food, Globertrot Farmsponsors Nigeria Limited, Farm Sponsors Limited, Cititrust Credit Limited, Farmfunded Agroservices Limited, Adamakin Investment & Works Limited.
The rest include: Cititrust Holding PLC, Green Eagles Agribusiness Solutions Limited, Chinmark Homes & Shelters Limited, Emerald Farms & Consultant Limited, Ovaioza Farm Produce Storage Limited, Farm 360 & Agriculture Company, Requid Technologies Limited, West Agro Agriculture & Food Processing Limited, NISL Ventures Limited & Estate of Laolu Martins, XY Connect Investment Limited, River Branch Unique Investment Limited, Hallmark Capital Limited, CJC Markets Limited, Crowd One Investment, Farmkart Foods Limited, KD Likemind Stakeholders Limited, Holibiz Finance Limited, Ifeanyi Okpe Oil & Gas Services, Servapps Nigeria Limited, Barrick Gold Mining Company and 360 Agric Partners Limited.
Despite the warnings, Nigerians are still falling into the hands of the schemers, leading to efforts to sanitise the sector and protect Nigerians.
And this is what led to the enactment of ISA 2025.
Provisions of ISA 2025
Under the new law, crypto and digital assets are officially recognised in Nigeria for the first time as part of Nigeria’s investment system—as a “digital asset” classified under securities. This means that crypto is no longer in legal limbo as the government has a defined role for it via regulation by SEC.
All crypto businesses must register with the SEC and follow clear rules.
One of the most significant updates in the Investments and Securities Act 2025 is the expansion of the regulatory powers of the Securities and Exchange Commission (SEC) over capital market operators, including digital asset service providers and imposing stringent sanctions on operators engaging in unethical practices.
Now, the investor has more protection against scams and shady platforms though it doesn’t readily mean the CBN has embraced crypto with open arms, but regulators are no longer ignoring it and the government is ready to play referee in the world of digital assets.
However, not every crypto platform is safe except they are not licensed or registered.
Also, the law now criminalises Ponzi schemes and unlawful investment practices in response to the rising number of schemes defrauding investors in the country.
The Investments and Securities Act explicitly criminalises such operations, prescribing severe penalties, including imprisonment and hefty fines, for individuals and entities involved in these fraudulent investment schemes.
ISA 2025 directly addresses ponzi and pyramid schemes with heavy consequences: up to 10 years in prison, up to N20 million in fines and possible confiscation of assets and permanent bans from the capital market.
Fintechs, investment apps and Robo-Advisors are not left out. With the ISA 2025, gone are the days of apps promising you “safe and easy investing” without rules. Fintechs have been brought under regulatory watch; investment platforms, savings apps, robo-advisors, and digital asset managers must register with the SEC. Also, they must clearly disclose risks, explain where your money is going, and protect your data and funds and are expected to behave like real financial institutions, not “tech bros with vibes”.
As an investor, you can now be safe if you stick with platforms that are registered or working toward registration and not just follow influencer hype and if you register, comply and educate your users as a fintech firm.
Section 273 of ISA also introduces a broad categorisation of security exchanges for ease of registration and operation. Securities exchanges are now categorised into Composite and Non-composite Exchanges. A Composite Exchange allows the listing and trading of all categories of securities and products, while Non-composite Exchanges are limited to specific asset classes for better market segmentation, encouraging specialisation and improved regulatory oversight, making it easier for investors and companies to navigate the market.
The Act also incorporates provisions for managing systemic risks within the capital market, in terms of safeguarding against crises that could undermine investor confidence and mandates the SEC to establish mechanisms for monitoring and mitigating systemic risks such as requiring capital market participants to submit relevant documents or information for monitoring and mitigating systemic risks.
ISA 2025 marks a significant advancement in Nigeria’s capital market regulatory framework and may be the end of the road for operatives of Ponzi schemes as it sets a new benchmark for market integrity in Nigeria.
