Memecoins
Investing in Davido meme coin is ‘highly risky’, SEC
The Securities and Exchange Commission (SEC) issued a warning to the public about the high risks associated with investing in Davido’s new cryptocurrency, $Davido.
Two weeks ago, the popular Nigerian artist unveiled $Davido, a meme coin, in collaboration with Phantom and Solana.
The cryptocurrency quickly attracted attention and generated profits for early investors.
However, the currency suffered a rapid collapse soon after, leading to significant losses for many of those who had invested in it.
This prompted a backlash on social media, with some users accusing the singer of orchestrating a scam.
In response to the situation, the SEC released a statement warning investors about the dangers of investing in the meme coin.
The commission has made clear that it does not recognize $Davido as a legitimate investment product or as an investable asset class under its regulatory framework.
The statement, shared on Friday, emphasizes that those who choose to invest in the coin do so at their own risk.
“The attention of the Securities and Exchange Commission, Nigeria (“SEC”) has been drawn to a meme coin known as “$Davido” allegedly linked to popular Nigerian singer, David Adedeji Adeleke AKA Davido.
In general, meme coins are cryptocurrencies inspired by internet memes and jokes. They are often envisioned as fun, light-hearted cryptocurrencies, promoted through a social media community and sometimes through celebrity endorsements.
“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, bonds, units of collective investment schemes, derivative contracts, commodities prime or other types of financial instruments or investments.
“The general public is WARNED that meme coins have no 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 participants are hereby cautioned not to associate with instruments that fall outside the regulatory purview of the SEC. Such instruments should in no way 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 individuals who sponsor it, do so at their own risk.
“The Commission will continue to monitor developments within the ecosystem and will not relent in exercising its regulatory powers as and when required,” the statement read.
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