The Securities and Exchange Commission (SEC), Nigeria’s capital market regulator, has warned against investing in the Davido meme coin, $Davido.
Meme coins are cryptocurrencies inspired by Internet jokes and memes. They often have a light-hearted or humorous theme, and social media publicity and celebrity endorsements can greatly influence their value.
The Grammy-nominated singer launched $Davido on May 29 in partnership with prominent blockchain platforms Phantom and Solana. Initially, the coin gained popularity and made profits for early investors.
However, shortly after its launch, the meme coin plummeted by more than ninety percent, causing losses for many investors.
On Friday, the SEC, supervised by the Federal Ministry of Finance, stated on its website that it does not recognize Davido’s $Davido as an investment product or investable asset class under its regulatory purview.
In a statement signed by its management, the commission noted that people who invest in the 31-year-old singer’s $Davido do so at their own risk.
The statement read in part: “The attention of the Nigerian Securities and Exchange Commission (SEC) has been focused on a meme coin known as ‘$Davido’ allegedly linked to famous Nigerian singer, David Adedeji Adeleke, also known as Davido. Generally, meme coins are cryptocurrencies inspired by Internet memes and jokes.
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“They are often thought of as fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements. Meme currencies 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 plans, derivative contracts, commodities or other type of financial or State instruments.”
$Davido is risky
Furthermore, the SEC stated that $Davido lacks fundamental value and is purely speculative, noting that investing in meme coins associated with Davido is very risky.
The commission added that people who invested in meme coins or $Davido did so with full knowledge of the associated risks.
“Through this Notice, Capital Market Operators are warned not to associate with instruments outside the regulatory scope of the SEC. Such instruments should not be distributed or monitored through any capital market mechanism,” the SEC noted.
The commission reiterated its commitment to continue monitoring developments within the ecosystem and will not hesitate to deploy its regulatory powers as necessary.
Meanwhile, Davido last made headlines on June 12 when he confirmed that his proposed traditional wedding ceremony with Chioma Rowland will take place in Lagos State. He has also fallen out with singer Portable after a short friendship that barely lasted a week.