Grace Ashiru
Nigeria’s Securities and Exchange Commission (SEC) has issued a warning to investors about $DAVIDO, a meme coin supported and promoted by Afrobeats superstar Davido, which plummeted by 90% within 24 hours of its launch. The coin rapidly reached a $10 million market capitalization just four hours after its launch on Wednesday, May 29.
In a statement on its website, the SEC said, “The Commission does not recognise $Davido as an investment product or investable asset class under its regulatory purview; therefore, individuals who patronise it do so at their peril.”
This disclaimer comes as Davido embarks on his third venture into the crypto space. The SEC’s warning could damage his reputation as a credible investment partner following the previous failures of $echoke on the Binance Smart Chain and Racksterli, which was revealed to be a Ponzi scheme.
The Grammy Award nominee faced accusations of rug pulling after he posted his gains from the project.
A rug pull is a type of scam in the cryptocurrency world where the developers of a coin project create a false sense of security and excitement. Investors are enticed with promises and what appears to be a legitimate project, only for the developers to disappear suddenly, leaving the invested funds inaccessible and the project worthless.
The SEC has warned the public against investing in the coin, stating that meme coins are 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…or other kinds of financial instruments or investments.”
“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 said.
