The Securities and Exchange Commission (SEC) has issued a warning to the public against investing in the meme coin allegedly linked to the popular Nigerian singer, David Adedeji Adeleke, also known as Davido.
The SEC statement, posted on the commission's website on Friday, cautions that anyone who patronizes the meme coin does so at their own risk. The statement reads:
"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.
Capital market operators are by this notice warned 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 recognise $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 SEC further explains that meme coins are cryptocurrencies inspired by memes and internet jokes, often promoted through social media and celebrity endorsements. They are not intended to serve as a medium of exchange accepted by the public or as a digital representation of capital market products.
The commission has warned that it will keep a close watch on market developments and is ready to step in with regulatory action as needed.
Davido, the popular Nigerian singer, unveiled the $Davido meme coin on Wednesday, May 29, 2024. However, the coin has been widely criticized by Nigerians after its value nosedived just a day after its launch, leading to disappointment and disillusionment among investors and fans.
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