Celebrities are now using their popularity to lure their millions of followers into an investment scheme that could consume their life savings. So, you shouldn’t be excited about the recent launch of a memecoin “Timeless Davido” or $DAVIDO by Afrobeat star David Adeleke aka Davido.
Singers such as him, Rema, and a former controversial senator Dino Melaye once promoted a Ponzi scheme Racksterli founded by Michael Oti.
Racksterli was a platform that promised mouth-watering returns within 30 days to his investors. The platform crashed in June 2021. It was largely promoted by Davido and other celebrities.
What is $DAVIDO?
$DAVIDO known as Timeless Davido is a crypto token launched on the Solana blockchain on May 29, 2024, by a Nigerian Afrobeat star Davido.
The token gained a massive buy, where investors pumped in over $24million USD within 24 hours of its launch. But liquidity stayed below 300,000 USD on the second day (Thursday, May 30, 2024). That raises questions!
Just as the excitement led to the appreciation in the value of the token, there was also a massive sell-off or dumping led by the singer, thereby leading to another massive reduction in the value of the memecoin. It’s trading at $0.002359 at the time of publication (Saturday, June 1, 2024).
Dumping, which is a notorious scheme used in the crypto community, can also be found in the stock market and other assets. It is mostly coordinated by the whales or investors who control the stake on an asset.
Can we blame the superstar for venturing into memecoin frenzy? Not really, but failing to warn his over 15 million X followers about the risk in crypto is an issue.
Celebrity-promoted investments are usually bubble
The brains behind certain investments know what it means for them to get a celebrity endorsement. Here are some of them:
Racksterli:
It’s a Ponzi scheme launched by one Michael Chidiebere Oti aka ‘Black Gold’ promised its Nigerian investors huge returns within 30 days.
During the early launch of Racksterli, Davido; Nollywood actress, Nancy Isime; Nollywood actor, Williams Uchemba; outspoken lawmaker, Dino Melaye, and award-winning singer Divine Ikubor aka Rema recommended the now defunct ponzi scheme to their millions of followers.
Davido specifically showed a face with a promotion for the scam investment when he said, “I wanna introduce you guys to one of the biggest investment platforms in Nigeria,” Davido once announced. “There are a lot of opportunities over there… It has been very very [sic] reliable for the past six months. We’ve had great recommendations.”
By the time it crashed in June 2021, 422,305 investors on the platform had lost over N1 billion, FIJ report which quoted a source described it as one of the biggest scams in Nigeria.
FTX:
Founded by a trader, FTX, which was once valued at $32 Billion USD, collapsed and it was estimated that investors lost $8 billion USD, sadly, the crypto platform and its products were promoted by global celebrities such as Kim Kardashian, Tom Brady, Jimmy Fallon, and Madonna. These celebrities and many others all promoted FTX on their social media platforms, says Joana Bailey of Giambrone in another report.
Their millions of followers around the world weren’t the only victims, the celebrities also lost fortunes.
$echoke:
On November 23, 2021, Davido launched social token $echoke on the Binance Smart Chain. The Token hardly survives for a year. Although the token was not designed to be sold, it was believed to be the initial promotional gimmick. Today, it has become a history that no one talks about today, unless they want to add to the list of failed tokens launched by the superstar.
EthereumMax:
With the ticker ‘EMAX’, the progressive ERC-20 token built on Ethereum network recorded what could be described a jackpot by getting Kim Kardashian and Floyd Mayweather to promote their less-known token.
“Are you guys into crypto????” was all Kardashian needed to say before revealing the name of the token.
While Kardashian promoted EthereumMax to her over 250 million followers on Instagram,Mayweather did the same to his over 7 million followers on Twitter now X.
Celebrities such as Matt Damon, Jamie Foxx, and Charli D’Amelio have promoted crypto assets to their followers in the past, and some of them are counting their losses. Crypto is risky
Why you should be careful
Davido acquired over 20% of $Davido token:
Timeless Davido was created on the popular Platform Pump Fun, a platform that allows crypto users to create a token in minutes, Davido reportedly received 7.5 SOL worth $1,27, as initial capital, according to Lookonchain, a Crypto research tool.
The singer used 7 SOL to acquire 203 million $Davido tokens which made up about 20.3 per cent of the total supply.
As the frenzy was growing, the singer sold 121.88 million $Davido tokens, raking in over $473,000 in profits within 11 hours. And after dumb, the price plummeted by 93%, in less than 24 hours after launch.
There is a red flag when the creator of a coin is holding more than 4% of their asset, says YouTuber, Mentoraa’s World, saying holding more than 4 per cent could give the creator too much power over the coin, meaning the value could plummet in the event of a sell-off, which happened to the $DAVIDO.
Flagged as a scam by X Community:
He was super-excited to announce the new coin, saying, “Join the community $DAVIDO ! More spaces coming soon and you’ll be REALLY excited by who we got coming up next! @davidotoken_sol” @lookonchain was quick to flag the coin as a pump and dumb.
$DAVIDO has no whitepaper:
Crypto products with valid use cases usually have a whitepaper that would have a timeline of the use case and how the funds raised would be used. SHIBA INU has a whitepaper, but $DAVIDO has none at the time of launch, making it look like a pump, dump, and cash-out scheme.
The token is not SEC-backed:
As far as we know, the Timeless Davido token has no approval from Nigeria’s Securities and Exchange Commission (SEC), an agency that regulates any form of investment in Nigeria, including tokens and other crypto-related products. For the singer to approve, he needs to present a draft of its white paper for approval, which he doesn’t have.
Finally,
While I can’t specifically say $DAVIDO is a scam at the moment, the red flags are obvious to ignore. Don’t be swept away by the crazy crypto frenzy.
Only invest in what you understand. As for crypto, only invest money you can afford to lose, don’t invest your life savings because the crypto market still lacks efficient regulation.
If Nigerians don’t forget easily, Racksterli, which Davido actively promoted, should be another sign that investment advice from him should be something they shouldn’t follow 100%.
As one of the most generous superstars on the continent, I hope the award-winning Afrobeat singer isn’t on the path of soiling the brand name he has built for years with some profits from crypto.