Nigeria’s Securities and Exchange Commission (SEC) has issued a disclaimer alert to investors regarding $DAVIDO, a meme coin backed and promoted by Afrobeats superstar Davido which dipped by 90 within 24 hours of its launch. It raced to a $10 million market capitalisation just four hours after it launched on Wednesday, May 29.

“The Commission does not recognise $Davido as an investment product or investable asset class under its regulatory purview, as such individuals who patronise it do so at their peril,” the SEC said in a statement on its website.

On his third venture into the crypto space, the disclaimer from the SEC could dent his reputation as a viable investment partner after the failure of $echoke on the Binance Smart Chain and Racksterli, which turned out to be a Ponzi scheme. 

The Grammy Award nominee was accused of rug pulling, after he posted his gains from the project. 

A rug pull is a scam in the cryptocurrency space where coin project developers create a false sense of security and hype. Investors are lured in by promises and a seemingly legitimate project, only to have the developers vanish abruptly, leaving the invested funds inaccessible and the project worthless.

The SEC advised the public against investing in the coin, noting that meme coins are 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…or other kinds of financial instruments or investments.”

“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 Commission said. 

Noah Banjo Senior Editor

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