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SEC issues warning on risks of investing in Davido’s Meme Coin

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The Securities and Exchange Commission (SEC) has issued a stark warning to the public regarding the high risks associated with investing in $Davido, a meme coin launched by popular Nigerian singer David Adedeji Adeleke, known as Davido.

In a statement released on Friday, the SEC emphasized that it does not recognize $Davido as an investment product or investable asset class under its regulatory purview. The warning follows the coin’s rapid rise in popularity and subsequent crash, leading to significant losses for many investors.

“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,” the statement reads.

The commission explained that meme coins, including $Davido, are typically inspired by internet memes and jokes. They are promoted through social media and sometimes celebrity endorsements but are not intended to serve as a medium of exchange or as legitimate financial instruments.

The SEC’s statement highlighted that meme coins lack fundamental value and are purely speculative, warning the public that investing in such cryptocurrencies is highly risky.

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“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 statement continued.

Additionally, the SEC cautioned capital market operators against associating with or distributing such 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.”

Despite the initial profits earned by early investors, $Davido experienced a sharp decline, leading to accusations of fraud against the singer. In response, the SEC reiterated its position that $Davido is not recognized as an investable asset class and that individuals who invest in it do so at their own risk.

“The Commission will continue to monitor developments within the ecosystem and will not relent in deploying its regulatory powers as and when required,” the SEC concluded.

This cautionary statement serves as a reminder of the inherent risks in the largely unregulated cryptocurrency market, especially with speculative assets like meme coins. Investors are urged to exercise due diligence and understand the risks before engaging in such investments.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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