The Securities and Exchange Commission (SEC) has issued a stark warning to the public about the risks associated with investing in $Davido, a meme coin recently launched by Nigerian singer David Adedeji Adeleke, popularly known as Davido.
Two weeks ago, Davido, in collaboration with Phantom and Solana, introduced the $Davido cryptocurrency.
The coin initially gained significant traction and generated profits for early investors. However, it experienced a swift crash, resulting in substantial losses for many who had invested.
Social media has since been rife with accusations against the singer, alleging the coin was a scam.
In response to the controversy, the SEC released a statement on Friday, clarifying that it does not recognize $Davido as a legitimate investment product or investable asset class within its regulatory framework.
The commission emphasized that investing in such meme coins is highly speculative and fraught with risk.
“The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to a meme coin known as $Davido allegedly linked to the popular Nigerian singer, David Adedeji Adeleke AKA Davido,” the statement began.
“Generally, meme coins are cryptocurrencies inspired by memes and internet jokes. They are often envisaged as fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements. Meme coins are also NOT intended to serve as a medium of exchange accepted by the public as payment for goods and services, or as digital representation of capital market products such as shares, debentures, units of collective investment schemes, derivatives contracts, commodities or other kinds of financial instruments or investments.”
The SEC further cautioned the public about the speculative nature of meme coins, stating, “The general public is HEREBY ADVISED that meme coins lack fundamental value and are purely speculative. The general public is further WARNED that investing in meme coins, including $Davido, is highly risky and should be done with a full understanding of the associated risk.”
The commission also addressed capital market operators, warning them not to engage with instruments beyond the SEC’s regulatory purview. “Capital Market Operators are by this Notice warned not to associate with instruments that fall outside the SEC’s regulatory purview. Such instruments should not in any manner be distributed or monitored through any capital market mechanism.”
In conclusion, the SEC reiterated that $Davido is not recognized as an investment product under its regulatory purview and that individuals who choose to invest in it do so at their own risk.
“The Commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required,” the statement concluded.
