The Securities and Exchange Commission of Nigeria (“SEC”) has issued a cautionary statement regarding the significant risks associated with investments in meme coins, including those linked to Afrobeat singer David Adeleke, popularly known as Davido.
In a statement released on Friday, June 14, 2024, the SEC highlighted that meme coins lack fundamental value and are purely speculative assets.
The Commission emphasized that meme coins are cryptocurrencies inspired by internet memes and jokes, often marketed as fun and light-hearted investments.
Their promotion is frequently driven by social media communities and sometimes bolstered by celebrity endorsements.
The SEC’s warning underscores the speculative nature of these digital assets and urges the public to exercise caution and due diligence before considering any investment in meme coins.
What SEC said
“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
“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 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 SEC further warned Capital Market Operators 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.
“PLEASE NOTE that the Commission does not recognize $Davido as an investment product or investable asset class under its regulatory purview, as such individuals who patronize it, do so at their peril.
“The Commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required.
Backstory
In May, the “Timeless” singer announced the launch of a crypto token or meme coin inspired by himself. The token known as “Timeless Davido” ($DAVIDO) was the latest addition to the new wave of celebrity-themed meme coins making the news in the crypto industry at the moment.
Davido announced the launch of the $Davido token on his X handle, and the tweet was acknowledged by the official Solana handle.
The $Davido token was launched on the Solana blockchain and was created using the popular Platform Pump Fun, which allows crypto users to create a token in a matter of minutes.
Crypto research tool Lookonchain reported that Davido received 7.5 SOL worth $1,275 as startup capital, which he used to create the $Davido token.
Despite the excitement and the rave created online by the launch of the $Davido tokens, the party was short-lived as the meme coin lost over 93% of its value by the next day.
The launch of the $Davido token is not the first time the Afrobeat superstar has ventured into the world of cryptocurrencies.
Nairametrics reported that the superstar previously launched $echoke on the Binance Smart Chain to provide a host of services, including non-fungible tokens, entertainment, media, and hospitality.
The project was short-lived and was soon forgotten.