SEC Warns Investors About Risks of $Davido Coins
By Patience Ikpeme
The Securities and Exchange Commission (SEC) of Nigeria has issued a stern warning about the high risks associated with investing in meme coins, with a specific focus on a new meme coin named $Davido, allegedly linked to the popular Nigerian singer David Adedeji Adeleke, also known as Davido.
In a circular dated June 14, 2024, the SEC highlighted the speculative nature of meme coins, emphasizing their lack of fundamental value and the potential dangers for investors.
The circular stated, “The attention of the Securities and Exchange Commission, Nigeria (‘SEC’) has been drawn to a meme coin known as ‘$Davido’ allegedly linked to the popular Nigerian singer, David Adedeji Adeleke AKA Davido.”
Meme coins, as described by the SEC, are cryptocurrencies inspired by internet jokes and memes, often promoted through social media communities and celebrity endorsements. Unlike traditional cryptocurrencies or financial instruments, meme coins are not designed to serve as a medium of exchange for goods and services or as a digital representation of financial assets such as shares, debentures, or investment schemes.
The SEC clarified, “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 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.”
Investors are therefore advised to exercise extreme caution. “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 stated.
The Commission also directed Capital Market Operators to steer clear of such speculative instruments. “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,” the SEC advised.
In addition, the SEC made it clear that it does not recognize $Davido as an investment product or an investable asset class within its regulatory framework. Consequently, individuals who choose to invest in $Davido do so at their own risk. “The Commission does not recognize $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 statement emphasized.
The SEC concluded by assuring the public of its commitment to monitoring developments in the cryptocurrency ecosystem and its readiness to deploy regulatory measures as necessary. “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.
