- The Nigeria Securities and Exchange Commission (SEC) has issued a notice warning the public about memecoins, including $DAVIDO, a memecoin linked to the Nigerian singer David Adedeji Adeleke, popularly known as Davido.
- According to the SEC, investing in memecoins, including $DAVIDO, is highly risky and should not be undertaken without a full understanding of the associated risks. Additionally, the authority highlighted that memecoins lack fundamental value and are speculative.
- The SEC clarified that it does not recognize $DAVIDO as an investment product or investable asset class under its regulatory umbrella, adding that individuals who patronise it do so at their peril.
Memecoins are cryptocurrencies inspired by internet memes. Defining this class of cryptocurrencies, the SEC mentioned that they are often seen as fun, light-hearted cryptocurrencies promoted through social media communities and sometimes through celebrity endorsements.
“Memecoins are also NOT intended to serve as a medium of exchange accepted by the public as payment for goods and services, or as digital representations of capital market products such as shares, debentures, units of collective investment schemes, derivatives contracts, commodities, or other kinds of financial instruments or investments,” SEC said.
Aside from the general public, the SEC extended the warning to Capital Market Operators, defined as any individual or corporate entity registered and enabled by the authority to perform specific functions in the capital market. A capital market is a place where buyers and sellers of financial instruments engage in transactions.
“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 said.
Furthermore, the SEC stated that it will continue to monitor developments in the ecosystem and will not hesitate to exercise its regulatory powers as and when required.
The $DAVIDO meme token was launched in late May, 2024 and reached 2,783 $SOL ($473,000) in profit 11 hours after launch, according to Lookonchain, an on-chain analytics platform. Lookonchain also mentioned that the memecoin had an unrealized profit of $207,000.
The platform explained that Davido received 7.5 $SOL ($1,275) as start-up capital, created $DAVIDO, and spent 7 $SOL ($1,190) to buy 203 million $DAVIDO (20.3% of total supply).
As of May 30, 2024, Lookonchain stated that he had sold 121.88 million $DAVIDO for 2,791 $SOL ($474,000). The sharp decline after launch sparked criticism in the market and among fans, raising concerns like if the token is a scam.
