The Securities and Exchange Commission (SEC) has issued a public advisory warning against investing in a meme coin allegedly associated with the renowned Nigerian singer David Adedeji Adeleke, popularly known as Davido. This caution was released in a statement on the SEC’s website on Friday.
The SEC highlighted the inherent risks associated with meme coins, emphasizing their lack of fundamental value and speculative nature. “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 statement read.
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Additionally, the SEC advised capital market operators to refrain from engaging with instruments beyond the commission’s regulatory framework. They emphasized that such instruments should not be distributed or monitored through any capital market mechanisms.
“Please note that the commission does not recognise $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 SEC stated. They also indicated their readiness to monitor market developments closely and take regulatory action if necessary.
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Explaining the nature of meme coins, the SEC noted, “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 investments.”
Davido launched the $Davido meme coin on Wednesday, May 29, 2024. However, the coin faced significant backlash after its value plummeted just a day post-launch, leading to widespread criticism from Nigerians. Disappointed investors and fans took to social media to express their frustration and disappointment over the coin’s nosedive in value.
Source: Punch NG.
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