THE PSYCHOLOGICAL AND FINANCIAL IMPACT OF ONLINE TRADING SCAMS ON NIGERIAN YOUTHS: A CASE STUDY OF CBEX,

CHAPTER ONE INTRODUCTION 1.1 Background of the Study In recent years, the proliferation of online trading platforms has revolutionized the investment landscape across the globe, offering unprecedented access to financial markets. Online trading platforms are digital interfaces that allow individuals and institutions to buy and sell financial instruments such as stocks, cryptocurrencies, forex, and commodities over the internet. These platforms have revolutionized global finance by democratizing access to investment opportunities and reducing barriers to entry. In developed economies like the United States and the United Kingdom, online trading adoption is widespread, with platforms such as Robinhood, eToro, and Interactive Brokers serving millions of users; for instance, Statista (2023) reports that over 55 million Americans engage in online trading activities. In contrast, developing economies in West Africa have seen a surge in digital trading, especially among tech-savvy youth seeking alternative income streams amid high unemployment. In Nigeria, this digital shift has particularly attracted a significant number of youths seeking financial independence and economic empowerment in the face of limited employment opportunities (Okoro & Ezeani, 2021). The rise of platforms such as cryptocurrency exchanges, foreign exchange (Forex) markets, and binary options has enabled even novice investors to participate in global finance with little to no formal training. Nigeria alone, over 33% of internet users have engaged in some form of digital trading, with platforms like Binance, Quidax, and CBEX gaining prominence (NIBSS, 2023). However, the regulatory frameworks in many West African countries remain underdeveloped, creating fertile ground for scams and fraudulent platforms that exploit users' limited financial literacy and weak consumer protection systems. According to Adeoye & Okafor, 2022, this surge in digital trading activities has also created fertile ground for fraudulent schemes and scams that exploit the vulnerability, optimism, and limited financial literacy of young investors. Adeleke & Yusuf, (2025) added that trading scam is a fraudulent scheme in which deceptive platforms or individuals lure victims—often through fake websites, mobile apps, or social media—into investing money under the guise of legitimate trading in stocks, forex, or cryptocurrency. These scams typically promise high returns with minimal risk but are designed to steal funds or personal data. Victims are often persuaded to deposit money into seemingly secure accounts, after which the scammers either disappear or manipulate the platform to show false profits before blocking withdrawals. Such scams have proliferated globally, especially in regions with weak regulatory oversight and limited financial literacy. One notable platform that has become emblematic of these fraudulent schemes is CBEX, an online trading platform that promised high-yield returns through cryptocurrency and forex investments. The platform lured many Nigerian youths with assurances of transparency, quick profits, and low risk, only to eventually collapse without recourse or restitution to investors. Thousands of victims, many of whom had invested their savings or taken loans, were left financially crippled and psychologically distressed (Ibrahim & Okafor, 2023). The CBEX case highlights the broader issue of online trading scams and their devastating effects on Nigeria’s youth population. Apparently, the psychological consequences of these scams are as profound as the financial losses. Victims frequently experience anxiety, depression, self-blame, and, in extreme cases, suicidal ideation (Adeyemi & Onuoha, 2022). For many, the trauma is compounded by societal stigma, familial pressure, and lack of institutional support. The psychological distress arising from these scams undermines not only individual mental well-being but also broader social stability. Moreover, the trust deficit created by such fraudulent activities discourages future participation in legitimate digital financial services, undermining national financial inclusion goals. Despite growing media coverage and anecdotal reports, there remains a critical gap in empirical studies examining the dual psychological and financial impact of online trading scams on Nigerian youths. Most existing literature has focused narrowly on cybersecurity or the economic mechanics of fraud, leaving out the human toll and behavioral dimensions of victimization (Olatunji & Udeh, 2021). A nuanced, youth-centered investigation is necessary to understand the full scope of these scams and to inform effective prevention and intervention strategies. This study, therefore, aims to examine the psychological and financial impact of online trading scams, using CBEX as a case study. It situates this analysis within the broader context of digital financial inclusion, youth vulnerability, and institutional regulation in Nigeria. By doing so, it contributes to ongoing conversations about protecting digital investors and ensuring ethical practices within the fintech ecosystem. 1.2 Statement of the Problem In recent times, Online trading scams have become increasingly prevalent in Nigeria, targeting unsuspecting youths eager to earn quick profits from forex, cryptocurrency, and stock markets. These scams are often facilitated through fraudulent platforms that present convincing interfaces, fake testimonials, and high return promises, only to vanish after collecting funds. Over the past decade, several platforms such as MMM Nigeria, RackSterli, and MBA Forex defrauded thousands of young Nigerians, leading to financial ruin and psychological distress for many victims (Okonkwo & Adewale, 2023; Nwachukwu, 2025). Currently, CBEX is under scrutiny for allegedly operating a similar fraudulent model, luring youths through social media and referral schemes with unrealistic profit assurances. These platforms often escape regulation due to weak oversight frameworks and the anonymity of digital transactions. Despite the growing prevalence of such scams and their devastating impacts, academic research in Nigeria has largely focused on the financial dimensions of fraud, neglecting the combined psychological and economic toll on youth populations. There is a noticeable gap in empirical literature examining how victims internalize the trauma of these experiences and how such losses affect their trust in digital financial systems and future economic behavior. The limited documentation of youth-specific vulnerabilities, especially in the West African digital finance context, has left policymakers and educators with little evidence-based direction for intervention. This study, using CBEX as a case study, seeks to fill this gap by exploring both the psychological distress and financial consequences endured by Nigerian youths, thereby contributing to preventive policy formulation and digital financial education. 1.3 Objectives of the Study The main objective of this study is to examine the psychological and financial impact of online trading scams on Nigerian youths using CBEX as a case study. Specific objectives include: 1. To investigate the extent of financial losses incurred by Nigerian youths in the CBEX trading scam. 2. To analyze the psychological effects, including trauma, anxiety, and depression, experienced by victims. 3. To examine the demographic and socioeconomic factors that influenced susceptibility to the CBEX scam. 4. To assess the role of regulatory bodies and the adequacy of institutional responses in addressing such scams. 1.4 Research Questions 1. What are the financial losses sustained by Nigerian youths due to the CBEX trading scam? 2. What psychological impacts have victims of the CBEX scam experienced? 3. What demographic and socioeconomic variables contributed to youth vulnerability in the CBEX case? 4. How effective have regulatory bodies been in preventing and responding to online trading scams like CBEX? 1.5 Significance of the Study This study is of significant practical and academic importance. On a practical level, it informs policymakers, financial regulators, and youth advocacy groups about the psychological and financial ramifications of online trading scams, thereby highlighting the urgent need for robust regulatory oversight and targeted youth education programs. The findings will help stakeholders develop trauma-informed financial literacy campaigns and mechanisms for institutional redress. From an academic perspective, this research contributes to the growing body of literature on financial fraud, digital vulnerability, and behavioral finance in emerging economies. It also bridges the gap between economics and psychology by exploring the lived experiences of scam victims. The study’s focus on the Nigerian youth demographic aligns with national development goals centered on financial inclusion, mental health, and youth empowerment. 1.6 Scope of the Study This study is geographically focused on Nigerian youths, with empirical data drawn specifically from individuals affected by the CBEX scam. It covers both psychological and financial domains to offer a holistic understanding of the impact of online trading scams. The demographic scope is limited to young Nigerians aged 18–35, residing primarily in urban centers where digital trading is more prevalent. 1.7 Definition of Terms Online Trading Scam: Fraudulent investment schemes conducted via digital platforms, promising high returns with little risk, often resulting in financial loss for participants. Psychological Impact: Emotional and mental effects such as stress, anxiety, depression, and trauma experienced by scam victims. Financial Impact: The measurable economic loss incurred by individuals due to fraudulent trading activities, including loss of savings or incurring debt. CBEX: An online trading platform that operated in Nigeria and became widely known for defrauding young investors through crypto and forex-related schemes.