“Highly Risky”: SEC Issues Warning to Nigerians Investing in $Davido Meme Coin

“Highly Risky”: SEC Issues Warning to Nigerians Investing in $Davido Meme Coin

  • The SEC has taken action in response to concerns regarding the recently minted digital meme coin $DAVIDO
  • The move followed claims in some quarters that some people who put money into it reportedly experienced losses
  • The commission warned the public to trade the coin at their own risk and stated that it lacked fundamental values

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

The Securities and Exchange Commission has reacted to concerns about the recently launched cryptocurrency meme coin $DAVIDO, allegedly linked to the popular Nigerian singer Davido.

SEC Issues Warning to Nigerians Investing in $Davido Meme Coin
Davido launched the $Davido meme coin crypto on Wednesday, May 29, partnering with blockchain platforms Phantom and Solana. Photo Credit: Davido, NurPhoto / Contributor
Source: Getty Images

Recall that Davido launched the crypto on Wednesday, May 29, partnering with blockchain platforms Phantom and Solana. It gained many people's patronage shortly after.

However, those who invested their funds are allegedly recording losses and calling him out on X for "scam".

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How SEC reacted to $Davido meme coin

In a recent release, the SEC clarified that meme coins are cryptocurrencies generally inspired by memes and internet jokes.

It explained that the coins are often envisaged as fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements.

It stated:

“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 a 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 commission said the coin lacked fundamental values and advised the public to trade it at their own peril.

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It noted:

“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.”
“Please note that the Commission does not recognise $Davido as an investment product or investable asset class under its regulatory purview, as such individuals who patronise it do so at their peril.”

It also warned capital market operators not to associate with instruments that fall outside the SEC’s regulatory purview.

Fintech expert advises on cryptocurrency

Legit.ng previously reported that a Fintech expert, Wale Fakorede, called on the federal government to kickstart a new business climate in Nigeria by reflecting the true story of cryptocurrencies.

Fakorede, a Lagos-based crypto trader, said the image of financial transaction technology has been brutalised in Nigeria, adding that the consequences are affecting the aggregate economy.

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Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng

Zainab Iwayemi avatar

Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng