Nigeria’s Securities and Exchange Commission (SEC) has cautioned potential investors to avoid investing in the new cryptocurrency linked to Nigerian Afrobeats singer, David Adeleke better known as Davido.
The Commission said in a statement on June 14, 2024, that the cryptocurrency $Davido, inspired by internet memes and online jokes, has no inherent value or weight.
“Generally, meme coins are cryptocurrencies inspired by memes and internet jokes. They are often envisaged as a fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements,” the Commission stated.
The Commission mentioned that Investing in schemes endorsed by celebrities, like Davido, is not regulated or protected. Anyone who invests in these schemes is doing so at their own risk and may lose their money.
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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.
According to the SEC “Capital Market Operators are by this Notice warned not to associate with instruments outside the SEC’s regulatory purview. Such instruments should not be distributed or monitored through any capital market mechanism.”
The SEC also cautioned against the use of the coin as a form of payment for everyday transactions or as a digital representation of financial assets like stocks, bonds, or commodities. “They are not a substitute for traditional currencies or financial instruments, and their value is not tied to any underlying asset or investment.”
Addressing the credibility of the cryptocurrency, the SEC stated that it does not recognise the $Davido as a valid investment under its regulatory expertise, stating that individuals who patronize do so at their own detriment.
Lately, Nigeria’s Central Bank has been clamping down on cryptocurrency exchanges as a measure to save the country’s failing currency and economic crisis. In March, one of the Central Bank’s targets was the crypto exchange platform, Binance – where authorities filed criminal charges against the company and its executives.
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But analysts say the move only worsens the current economic situation.
“It is something that was caused as a result of our reckless demand and utilization of hard currency in Nigeria. The major challenge is not in the amount of fictitious assets or dollars that people kept in their crypto accounts. It is in the volume of dollars that was released physically by the Central Bank of Nigeria,” Isaac Botti, a public finance expert told VOA Africa.
