African investors have been left reeling after falling victim to CryptoBridge Exchange (CBEX), an elaborate crypto-trading platform that has been preying on individuals across the continent. Lured by promises of guaranteed monthly returns powered by AI trading systems and lucrative referral bonuses—classic hallmarks of Ponzi schemes, investors like Edwin, a Kenyan government worker, lost significant life savings. Despite its collapse in April, leaving scores ruined primarily in Kenya and Nigeria, CBEX has reportedly rebooted operations, underscoring the persistent challenge of crypto fraud in the region.
The Lure of Guaranteed Returns
Edwin, a Kenyan government worker, became one of many victims after encountering CBEX on Telegram. He was enticed by promises of guaranteed monthly returns, allegedly made possible by advanced AI-powered trading systems. These offers, coupled with lucrative referral bonuses, are classic indicators of a Ponzi scheme designed to attract new investors with the illusion of high, stable profits.
Devastating Losses and Persistent Debt
Despite lacking prior cryptocurrency trading experience, Edwin invested heavily, fueled by initial returns. He ultimately lost an estimated 2.1 million Kenyan shillings ($16,000), primarily from a bank loan he now faces the daunting task of repaying. His story is echoed by countless others across Africa, including Abby, another Kenyan investor burdened by the guilt of introducing 25 family members and friends to the collapsed scheme.
Sophisticated Scams Target Africa
Crypto scams are not new to Africa, but their scale and sophistication have grown significantly as cryptocurrency adoption spreads across the continent. CBEX’s collapse in April left scores of investors, mainly in Kenya and Nigeria, financially devastated. Disturbingly, despite ongoing investigations and warnings from authorities, CBEX has reportedly rebooted its operations, as confirmed by messages accessed in its private Telegram groups.
Brandjacking and False Legitimacy
CBEX employed a “brandjacking” tactic, adopting an acronym similar to the legitimate China Beijing Equity Exchange to project an air of credibility. The platform falsely claimed to be licensed in the US and asserted that ST Technologies International was responsible for its AI trading signals. It even obtained an anti-money laundering certificate from Nigeria’s EFCC, which the EFCC later clarified was only for “consultancy services,” not for currency exchanges.
Obscuring the Money Trail
While pretending to actively trade, CBEX secretly moved funds out of investors’ wallets via TRON, a decentralized blockchain network. These assets then underwent complex routing through multiple wallets and cryptocurrency conversions, meticulously designed to obscure the audit trail. Kenyan cryptocurrency investigator Wycklife Sewe explained that CBEX’s system used code to create the illusion of growing funds, even as money was immediately siphoned off after deposit.
International Warnings and Regulatory Responses
International bodies had issued warnings against CBEX. In April 2024, the Hong Kong Securities and Futures Commission issued a public alert against “CBEX Group.” A crypto analyst linked CBEX’s withdrawal wallets to Huione Guarantee, a darknet marketplace designated by FinCEN as a “primary money-laundering concern” for facilitating over $4 billion in illegal transactions. Following CBEX’s collapse, Kenya’s Capital Markets Authority issued an “Investor Alert,” and Nigeria enacted legislation criminalizing Ponzi schemes.
The Long Road to Recovery
Investigations into schemes like CBEX are lengthy and expensive, making fund recovery a complex challenge. While Nigeria’s EFCC reported recovering a “reasonable sum” of lost funds in May, the amount was undisclosed, highlighting the difficulties in converting cryptocurrencies back to national currency. For victims like Abby, who lost everything, the path forward is daunting, serving as a stark reminder of the critical need for investor vigilance and robust regulatory frameworks.
