The Securities and Exchange Commission (SEC) of Nigeria has issued a stern warning against investing in the meme coin known as “$Davido,” allegedly linked to popular Nigerian singer David Adedeji Adeleke, better known as Davido. In a circular dated June 14, 2024, obtained by journalists in Abuja, the commission cautioned that the meme coin lacks fundamental value and is purely speculative, posing significant risks to investors.
The circular stated, “The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to a meme coin known as ‘$Davido’ allegedly linked to a popular Nigerian singer, David Adedeji Adeleke aka Davido.”
“Generally, meme coins are cryptocurrencies inspired by memes and internet jokes. They are often envisaged as fun, light-hearted cryptocurrencies promoted through social media communities and sometimes through celebrity endorsements.”
The SEC provided further context on meme coins, explaining that they “are 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.”
In its warning, the commission emphasized the high risks associated with investing in meme coins like $Davido. “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 circular cautioned.
Furthermore, the SEC made it clear that it does not recognize $Davido as an investment product or investable asset class under its regulatory purview. “The commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required,” the circular added.
The commission also warned capital market operators against associating with instruments that fall outside the SEC’s regulatory purview, stating that “such instruments should not in any manner be distributed or monitored through any capital market mechanism.”
This warning from the SEC underscores the potential risks associated with investing in meme coins, which are often driven by social media hype and celebrity endorsements rather than fundamental value.
Investors are advised to exercise caution and thoroughly understand the risks before considering investing in meme coins like $Davido.
