Financial analysts have expressed significant concerns regarding Davido’s newly launched meme coin, warning of potential risks associated with such ventures. The coin’s introduction has ignited debate within financial circles, drawing comparisons to historical Ponzi schemes like MMM, which led to substantial losses for millions of investors.
Experts have noted that these coins often capitalize on the popularity of celebrities without having strong underlying fundamentals or a clear business model. Vincent Nwani, a financial analyst, emphasized that the proliferation of such coins could negatively impact the Nigerian financial system.
“To begin with, I’m a huge fan of Davido, his music, and his family, and I will continue to enjoy his tremendous contribution to the Nigerian entertainment industry. Notwithstanding, the recently launched Davido coin is a bit overboard for me because of its semblance to various Ponzi schemes that we have contended with in this economy,” Nwani stated. He pointed out that Davido’s celebrity status and fan base were the primary drivers of the coin’s value proposition.
“I say this for so many reasons. First, the workings of the coin seem to be conceived on the strength of Davido’s popularity, which he follows with a firm belief that the platform can successfully leverage his brand. If such a coin is allowed to thrive, what it does is that other popular personalities in Nigeria will quickly follow suit, and gross cases of abuse become inevitable. No doubt, this reality has a downside implication for the Nigerian financial system.
“The MMM experience remains so fresh in our minds. Three million Nigerians lost about N18bn to MMM, and this must not be allowed to happen again.”
The Securities and Exchange Commission (SEC) has stated that the meme coin did not receive regulatory approval and has warned capital market operators against associating with it. Financial analyst Ambrose Omorodion also advised those without financial knowledge to avoid investing in cryptocurrency, highlighting the high risks involved.
“In the financial market, we need more products to fall into. However, meme coins are highly risky and I believe that is why the SEC came out to warn people that they are risky.
“Also, since cryptocurrency has emerged in the global space, I can see that people are now venturing into it, but my advice is that if they do not have the financial knowledge, they should not go into it or invest at all. The SEC will not sue the company if investors become victims,” Omorodion explained.
