LAGOS, Nigeria (VOICE OF NAIJA) – Financial experts have expressed significant concerns about the potential risks linked to Davido’s recently introduced meme coin.
The introduction of the coin has ignited a heated debate within financial circles.
Experts have drawn parallels to historical Ponzi schemes, such as MMM, which saw millions of investors suffer substantial financial losses.
Experts contend that these coins frequently rely on the fame of celebrities rather than solid financial foundations or a well-defined business plan.
A financial analyst, Vincent Nwani, stated that if such a coin was allowed to flourish, it would negatively affect the Nigerian financial system.
He said, “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.”
He pointed out that the coin’s value largely hinges on Davido’s celebrity status and extensive fan base.
READ ALSO: Steer Clear Of Davido’s Meme Coin, SEC Warns
“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 announced that the meme coin lacks regulatory approval and cautioned capital market operators against involvement with it.
Financial analyst Ambrose Omorodion advised those lacking financial expertise to steer clear of cryptocurrency investments, noting that the SEC would not pursue legal action if investors incur losses.
“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,” he explained.