Prepare the Tofu: Press the tofu to remove excess moisture. Crumble it into small pieces resembling ground meat.
Cook the Tofu: In a medium skillet, heat the olive oil over medium heat. Add the crumbled tofu and cook, stirring occasionally, until it starts to brown and becomes slightly crispy, about 8-10 minutes.
Sauté the Vegetables: In a large pot or Dutch oven, heat a bit more olive oil over medium heat. Add the diced onion and sauté until translucent, about 5 minutes. Add the garlic, bell pepper, and jalapeño (if using) and sauté for another 5 minutes until the vegetables are softened.
Combine Ingredients: Add the browned tofu, black beans, kidney beans, diced tomatoes, vegetable broth, and tomato paste to the pot. Stir to combine.
Season and Simmer: Add the chili powder, cumin, smoked paprika, oregano, salt, and pepper. Stir well. Bring the mixture to a boil, then reduce the heat and let it simmer uncovered for about 30 minutes, stirring occasionally, until the chili has thickened and the flavors have melded together.
Adjust Seasoning: Taste the chili and adjust the seasoning if necessary.
Serve: Ladle the chili into bowls and garnish with fresh cilantro and lime wedges. Serve hot.