Investing in Davido’s meme coin highly risky – SEC warns

The Securities and Exchange Commission (SEC), Nigeria’s capital market regulatory institution, has warned against investing in Davido’s meme coin, $Davido.

Meme coins are cryptocurrencies inspired by internet jokes and memes. They often have a light-hearted or humorous theme, and social media hype and celebrity endorsements can heavily influence their value.

The Grammy-nominated singer launched $Davido on 29 May in partnership with prominent blockchain platforms Phantom and Solana. The coin initially gained popularity and earned profits for early investors.

However, shortly after its launch, the meme coin crashed by over ninety per cent, resulting in losses for many investors.

On Friday, the SEC, supervised by the Federal Ministry of Finance, stated on its website that it does not recognise Davido’s $Davido as an investment product or investable asset class under its regulatory purview.

In a statement signed by its management, the commission noted that individuals who invest in the 31-year-old singer’s $Davido do so at their own risk.

The statement partly read: “The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to a meme coin known as ‘$Davido’ allegedly linked to the famous 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 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, debentures, units of collective investment schemes, derivatives contracts, commodities, or other kinds of financial instruments or State.”

$Davido is risky

Furthermore, the SEC stated that $Davido lacks fundamental value and is purely speculative, noting that investing in meme coins associated with Davido is highly risky.

The commission added that individuals who invested in meme coins or $Davido did so with a complete understanding of the associated risks.

“Capital Market Operators are by this Notice warned not to associate with instruments outside the SEC’s regulatory purview. Such instruments should not be distributed or monitored through any capital market mechanism”, SEC noted.

The commission reiterated its commitment to continue monitoring developments within the ecosystem and will not hesitate to deploy its regulatory powers as needed.

Meanwhile, Davido last made headlines on 12 June when he confirmed that his proposed traditional wedding ceremony to Chioma Rowland will occur in Lagos State. He has also fallen out with singer Portable after a short-lived friendship that barely lasted a week.