10 Red Flags to Avoid Investment Scams
10 Investment Statements That Should Instantly Raise Your Suspicion – How to Spot Scams Before They Drain Your Wallet
Introduction: The Rising Tide of Financial Scams – Are You Next?
You're an investor—or an aspiring one—looking to grow your money in stocks, crypto, real estate, or high-yield schemes. But here's the brutal truth: scammers are hunting for people like you. The rate at which people are being swindled nowadays is skyrocketing, both in Nigeria and across the globe.
Take for example. According to a PUNCH report on April 24, 2025, titled "Americans lost $6bn to crypto scams in 2024 – FBI", the Federal Bureau of Investigation revealed that investment scams involving cryptocurrency led to a staggering $5.8 billion loss in 2024 alone.
But that's just the tip of the iceberg.
And Nigeria? The situation is just as dire. Less than two weeks ago, CBEX (Crypto Bridge Exchange), a cleverly conceived and executed crypto-scamming exchange collapsed, vanishing with an estimated N1.3 trillion of hard-earned money from unsuspecting Nigerians. Many are still reeling from the financial devastation. My own wife fell victim to the scam of CBEX—a fraudulent Nigerian-based crypto operation registered with the name ST Technologies International Limited.
So, the million-naira (or dollar) question is: How do you protect yourself from these predators? How do you spot scams before you're caught in their financial wrecking webs?
The answer? Learn the red flags.
In this exposé, we'll reveal the 10 investment Statements that should instantly make you suspicious based on the research of Kent Baker and Vesa Puttonen on "Trap 2: Becoming a Victim of Investment Frauds and Scams" In Navigating the Investment Minefield.
Investment Statement No. 1: "Guaranteed High Returns with Zero Risk"
The number one investment Statement is a Statement of a guaranteed of high return with zero risk. This is clearly a scam. This Statement of high returns with zero risk violates the maxim 'no risk no return'. No legitimate investment offers "guaranteed" returns—especially not risk-free ones. Going down the memory lane, Bernie Madoff's Ponzi scheme Statement was "consistent 10-12% annual returns", and ended up swindling investors out of $65 billion. In recent years, the Nigerian "Wonder Banks" like MMM (in 2016) and Swiss Golden (in 2017) collapsed after luring victims with "20% guaranteed monthly returns."
Red Flags:
- ✅ "Risk-free" claims (All investments carry risk)
- ✅ "Too good to be true" returns (If it sounds unrealistic, it probably is)
- ✅ Pressure to invest quickly (Scammers don't want you to think)
Just so you know, a 2024 SEC report found that 87% of fraudulent schemes used "guaranteed returns" as bait. If and when next you hear "100% guaranteed return in 30 days", run!
Investment Statement No. 2: "Exclusive VIP Investment Opportunity – Limited Slots!"
Have you heard it before? "Executive VIP investment opportunity, limited slots". This is one of scammers' Statements disguised as a limited and once-in-a-lifetime opportunity for you. Scammers create false urgency, and attractive imperativeness to prevent due diligence. To prevent you from investigating the genuineness or otherwise of the investment deal.
As an illustration, OneCoin (a $4 billion scam) sold "exclusive crypto education packages" before disappearing. So also forex schemes like iMarketsLive used "limited VIP access" to lure and con unwary victims.
Red Flags:
- ✅ "Only a few spots left!" (Classic pressure tactic)
- ✅ Requires immediate payment (No time to verify)
- ✅ No verifiable track record (Check SEC/EFCC warnings)
📊 Poll: Have you ever been pressured into an "exclusive" investment?
Investment Statement No. 3: "Get Rich Quick with This Secret Formula!"
This investment Statement is a constant rehash for many a scammer. I still find it hard to believe that people fall for this Statement. If it were that easy to get rich, everyone would have been a millionaire, now. For instance, the Bitcoin doubler scam statement was "send 0.1 BTC, get 0.2 BTC back". But did this ever happen? No! Never! CBEX Statement was "make investors rich within a month" by doubling their investment using AI-powered trading of crypto currency. We all know what became of it.
Red Flags:
- ✅ "Secret method" claims (Real investing requires research)
- ✅ No proof of past success (Ask for audited records)
- ✅ Requires recruiting others (Pyramid scheme alert!)
📊 Chart: Top 5 "Get Rich Quick" Scams in Nigeria (2024)
| Scam Type | Estimated Losses |
|---|---|
| Crypto Ponzi Schemes | ₦450 Billion |
| Forex Robot Scams | ₦200 Billion |
| Fake Binary Options | ₦180 Billion |
| MLM Pyramid Schemes | ₦150 Billion |
| Fake Real Estate | ₦120 Billion |
Investment Statement No.4: "Our Company Is Registered, But We Can't Show You Proof"
CBEX informed its uninformed investors that they were registered with EFCC and SEC. But nobody investigated or ask them to show the proof of their registrations. Know that legitimate investment firms must be registered with financial regulators. For instance, in Nigeria, check SEC (Securities and Exchange Commission) to establish their purported registration. In the U.S., verify with SEC or FINRA. While in the UK, check the FCA (Financial Conduct Authority). As we all know already, CBEX claimed SEC registration but was never approved by SEC.
Red Flags:
- ✅ Vague about licensing ("Trust us, we're legit!")
- ✅ Fake regulatory badges (Easy to Photoshop)
- ✅ Offshore registration only (No local oversight. We are registered in China)
Pro Tip:
➡️ Search the company name + "scam" online.
➡️ Check SEC/FCA/FINRA databases directly (not through their link).
Investment Statement No.5: "You Must Recruit Others to Earn" (Pyramid Scheme Alert!)
My wife was recruited by her sister. And she was also encouraged to get as many people to sign up for the investment in CBEX. But real investments grow from profits, not recruitment.
MMM Nigeria ( in 2016) collapsed after new recruits dried up. OneCoin (a Global ponzi scheme) made money only by bringing in new members. There were no particular underlying assets that bring in profits from all these 'investment schemes'.
Red Flags:
- ✅ Earnings depend on referrals (Not product sales, no assets yielding incomes)
- ✅ Focus on "team building" over actual profits
- ✅ No real product/service (Just "memberships")
📊 Survey: Have you or someone you know been approached with a "recruitment-based" investment?
Investment Statement No.6. "We Use a Proprietary Algorithm/AI – It's Too Complex to Explain"
Do this sound familiar to you CBEX investors? Didn't they inform you that their crypto currency trading is powered by AI and therefore profit is always guaranteed? Fraudsters hide behind tech jargon to sound credible. For instance, crypto trading AI bots that "never lose" (until they vanish with your money like CBEX did to my wife's).
Red Flags:
- ✅ "Black box" strategy (No transparency)
- ✅ Refusal to explain how it works
- ✅ Claims of "AI-powered" trading with no proof
Pro Tip:
➡️ Ask for a live demo (Not just past performance screenshots).
➡️ Search forums like Reddit or Nairaland for user experiences.
Investment Statement No.7: "Send Crypto/Wire Transfer – No Bank Payments Allowed"
This statement is also very common from these swindlers. It's a Scamming technique or statement because a wire transfer or crypto transfer is an Irreversible payment. There is no way to recover fund unlike if you execute the payment from the bank. For instance, CBEX Nigeria (2025) – Only accepted crypto, then disappeared. If a so-called forex broker demands that you make a wire transfer to an offshore account, that's a major red flag — it's likely an investment scam. In my wife's case, many of the people who thought they were investing in crypto through CBEX never actually paid CBEX directly. For example, my wife sent money to her sister, who then transferred it to someone else abroad — and so the chain continued. If you're not making payments directly to the company you believe you're dealing with, be cautious. That's often a sign of scam. The scammers want to cover their tracks.
Red Flags:
- ✅ No traditional payment options (Only crypto, gift cards, etc.)
- ✅ Pressure to send money quickly
- ✅ "Bank transfers take too long" excuse
Investment Statement No.8: "Celebrity X Uses This – Join Now!" (Fake Endorsements)
The first thing my wife told me when she pitched CBEX to me was, "many celebrities are investing in CBEX". But this is often a scam. Scammers sometimes photoshop celebrities or pay for fake ads. For instance if it says a Nollywood star like Iyabo Ojo has also invested in it, know that it's a Ponzi scheme.
Red Flags:
- ✅ No verified social media proof
- ✅ Celebrity denies involvement when asked
- ✅ Ads on shady websites, not official pages
Pro Tip:
➡️ Check the celebrity's REAL account (Not a fake page).
➡️ Google "[Celebrity Name] + scam" to see if it's a known fraud.
Investment Statement No.9: "We're Based Offshore for Tax Benefits – Totally Legal!"
It's important to note that having an offshore account or company isn't illegal. However, scammers often exploit offshore jurisdictions to avoid regulation and oversight. Many Nigerian Ponzi schemes that have duped unsuspecting investors operate from places like Dubai, Mauritius, or the Cayman Islands — locations with looser financial regulation. Even CBEX, the so-called crypto investment platform, was reportedly operating out of China. So when you're asked to wire money to an offshore account — especially through third parties instead of directly to the organization — it's a major red flag. In my wife's case, for supposed investment she sent the money to her sister, who then sent it to someone else abroad. That's a classic sign of an investment scam.
Red Flags:
- ✅ No physical office in your country (or they might even have but it's just a small store)
- ✅ Vague about which authorities regulate them (is it EFCC that should regulate CBEX or SEC?)
- ✅ "Tax-free earnings" as a main selling point
📊 Chart: Top 5 Countries Used by Investment Scammers
| Country | Why Scammers Love It |
|---|---|
| Cayman Islands | Loose financial laws |
| Mauritius | Easy shell companies |
| Seychelles | No corporate taxes |
| Belize | Anonymous ownership |
| UAE (Dubai) | Flashy but little oversight |
Investment Statement No.10: "Just Trust Me – I Made Millions Doing This!" (Fake Testimonials)
My wife often said then that her sister had cashed out. She also reeled out the list of testimonies of people who were already millionaire from investing into CBEX. But it's a Scam: Anyone can fake screenshots of "profits". Anyone can create beautiful testimonies of becoming multi-millionaire to lure you into 'investing'. Most of the crypto "success stories" are designed to bait you.
Red Flags:
- ✅ No verifiable trading history (It's just them say)
- ✅ "Results not typical" disclaimer hidden
- ✅ Refusal to show real-time proof (at least to be close to those who made this money from the investment)
Pro Tip:
➡️ Ask for a live video call to see their "portfolio."
➡️ Reverse-image search testimonial photos (often stolen).
🚨 BONUS: How to Verify an Investment Opportunity
Therefore, before investing even 1 Naira/Dollar, do this:
- Check Regulatory Licenses (SEC, FCA, FINRA, etc.)
- Google "[Company Name] + scam"
- Avoid "Urgent" Investments (Scammers rush you)
- Never Pay in Crypto/Gift Cards (Use traceable methods)
- Consult a Financial Advisor (Not the person selling it!)
📊 Interactive Quiz: Could You Spot a Scam?
(Take this 5-question test to see if you'd fall for these tricks!)*
1. A company promises "guaranteed 50% returns in 30 days" with no risk. What should you do?
Conclusion: Protect Yourself – Or Regret Later
Investment scams are sophisticated, ruthless, and growing. It's CBEX today, another one is coming tomorrow. But now, you know the 10 biggest red flags to watch for.
If an offer:
- Statements guaranteed returns
- Pressures you to act fast
- Uses celebrity fake endorsements
- Only takes crypto payments
- Can't prove its legitimacy**
RUN!
Your hard-earned money deserves real growth—not a scammer's luxury car.
📢 Share this guide with friends & family—you might save someone from financial ruin.
📢 Your Turn: Have You Been Scammed?
Share your story in the comments—let's expose these fraudsters together!
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