The Securities and Exchange Commission has reacted to concerns about the recently launched cryptocurrency meme coin $DAVIDO, allegedly linked to the popular Nigerian singer Davido.

Recall that Davido launched the crypto on Wednesday, May 29, partnering with blockchain platforms Phantom and Solana and gaining many people's patronage.

However, those who invested their funds are allegedly recording losses and calling him out on social media X for "scam".

How SEC reacts

In a recent release, the SEC clarified that meme coins are cryptocurrencies generally inspired by memes and internet jokes.

It explained that the coins are often envisaged as fun, light-hearted cryptocurrencies promoted through a social media community and sometimes through celebrity endorsements.

It stated, “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.”

On this note, the commission said the coin lacked fundamental values and advised the public to trade it at their own peril.

It noted, “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.”

“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 patronise it do so at their peril.”

It also warned the Capital Market Operators not to associate with instruments that fall outside the SEC’s regulatory purview.