Memecoins
Analysts warn investors against Davido meme corner
Financial analysts have raised concerns over Davido’s newly launched coin and warned of associated risks.
The introduction of the coin to the market sparked debate within financial circles.
Experts have pointed out similarities to historical Ponzi schemes, such as MMM, in which millions of investors lost substantial sums.
Analysts have argued that these coins often capitalize on the popularity of individuals without strong underlying fundamentals or a clear business model.
A financial analyst, Vincent Nwani, said if such a currency was allowed to flourish, it would have a negative impact on the Nigerian financial system.
He said: “To begin with, I am a huge fan of Davido, his music and his family, and I will continue to appreciate his tremendous contribution to the Nigerian entertainment industry. Nonetheless, the recently launched Davido coin is a bit of a stretch for me due to its resemblance to various Ponzi schemes we have faced in this economy.
He noted that Davido’s celebrity status and fan base were the main drivers of the coin’s value proposition.
“I say this for so many reasons. Firstly, the operation of the coin seems to be designed based on Davido’s popularity, which he follows with the firm belief that the platform can successfully leverage his brand. If such a currency is allowed to flourish, it will result in other popular figures in Nigeria quickly following suit, and blatant cases of abuse will become inevitable. There is no doubt that this reality has negative consequences for the Nigerian financial system.
“The MMM experience remains so fresh in our minds. Three million Nigerians lost about N18 billion to MMM, and this must not be allowed to happen again.
The Security Exchange Commission said the meme coin had not obtained regulatory approval and warned capital market operators not to associate with it.
Another financial analyst, Ambrose Omorodion, advised anyone without financial knowledge to avoid investing in cryptocurrency, adding that the SEC would not take the company to court if investors suffered losses.
“In the financial market we need more products. However, meme coins are very risky and I think that is why the SEC has warned people that they are risky.
“Also, since cryptocurrency has emerged in the global space, I can see people venturing into it now, but my advice is that if they don’t have the financial knowledge, they shouldn’t get started or invest at all. The SEC will not pursue the company if investors become victims,” he explained.