The Securities and Exchange Commission (SEC) has issued a warning to investors about the high risks associated with investing in meme coins, including $Davido.
In a circular dated June 14, 2024, the SEC stated that meme coins, such as $Davido, are highly speculative and lack fundamental value.
The SEC noted that meme coins are cryptocurrencies inspired by memes and internet jokes, often promoted through social media and celebrity endorsements.
It stated that they are not intended to serve as a medium of exchange or digital representation of capital market products.
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The Commission advised the public to exercise caution and fully understand the risks before investing in meme coins. It also warned capital market operators not to associate with instruments outside the SEC’s regulatory purview.
The SEC emphasized that “$Davido is not recognized as an investment product or asset class under its regulatory purview, and individuals who invest in it do so at their own risk. The Commission will continue to monitor developments in the ecosystem and deploy its regulatory powers as needed.”
