Nigeria’s Securities and Exchange Commission (SEC) has issued a disclaimer to investors regarding $DAVIDO, a meme coin backed and promoted by Afrobeats superstar Davido, which plummeted by 90% within 24 hours of its launch. Despite initially racing to a $10 million market capitalization just four hours after its launch on Wednesday, May 29, the coin quickly lost value.
“The Commission does not recognize $Davido as an investment product or investable asset class under its regulatory purview. Individuals who patronize it do so at their peril,” the SEC stated on its website.
This is Davido’s third venture into the crypto space, and the SEC’s disclaimer could further damage his reputation as a viable investment partner following the failures of $echoke on the Binance Smart Chain and Racksterli, which turned out to be a Ponzi scheme.
The Grammy Award nominee faced accusations of rug pulling after posting his gains from the project. A rug pull is a scam in the cryptocurrency space where developers create a false sense of security and hype. Investors are lured in by promises and a seemingly legitimate project, only for the developers to abruptly vanish, leaving the invested funds inaccessible and the project worthless.
Read also: Davido’s meme-coin crashes just a day after hitting the market.
The SEC advised the public against investing in the coin, noting 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 added.
