Davido's Latest Crypto Token Drops After Initial Surge

Key Insights:

• Davido's $DAVIDO token surged to $10M but dropped 90% within hours, sparking fears of a pump-and-dump scheme.
• Prominent influencers flagged $DAVIDO as a potential scam, noting the creators cashed out $500K, leaving investors at a loss.
• $DAVIDO's rapid fall underscores the risks in celebrity-endorsed crypto, with investors urged to exercise caution.

Afrobeats superstar Davido ventured into cryptocurrency again on Wednesday night, promoting and endorsing the "Timeless Davido" ($DAVIDO) token.

Launched on the Solana blockchain, the token quickly gained attention despite its unclear utility and obscure use cases linked to an unknown website and Telegram group.

Solana's official Twitter welcomed Davido, and within four hours of its launch, $DAVIDO surged to a $10 million market cap.

However, the token's valuation had plummeted by 90 percent by Thursday morning. According to DEX Screener, its liquidity stood at $291,000 at the time of this report.

Davido's active promotion of the coin in multiple tweets initially suggested a promising trajectory. However, the rapid decline in value indicates a potential pump-and-dump scheme, raising concerns among investors.

Previous Ventures and Controversies

This isn't Davido's first foray into cryptocurrency. In November 2021, he introduced $echoke on the Binance Smart Chain, aiming to provide access to various entertainment and media benefits.

Despite its promising start, $echoke was short-lived and faded from memory. Furthermore, Davido promoted Racksterli, a Ponzi scheme that defrauded users of ₦1 billion, leading to backlash and calls for more responsible use of his influence.

Many coin holders fear they have fallen victim to a rug pull with $ DAVIDO. This occurs when project developers abandon the project, taking all invested funds. A crypto expert told TechCabal, "Davido does not need this negative publicity. Whatever money he earned from it is not worth it."

Suspicions of a Pump-and-Dump Scheme

Many who purchased $DAVIDO anticipated it would see a valuation increase, allowing them to profit. However, this required the developers to resist executing a pump-and-dump scheme. These schemes involve artificially inflating a token's price before selling holdings at the peak, leaving late buyers at a loss.

Memecoins often experience significant valuation jumps before cooling off. However, three crypto experts told TechCabal that many promoters structure these coins to allow ordinary users to profit. In the case of $DAVIDO, the creators appeared willing to take profits from the start at the expense of coin holders.

Crypto influencers raised alarms on Wednesday night, noting that the wallet responsible for creating the token sold substantially, cashing out $200,000 within hours. "It's a pump and dump scheme.

The wallet that initiated the token is trackable, and it was offloading the token live as Davido was tweeting about it," a crypto trader told TechCabal. Another analysis claimed the token's creators accumulated approximately $500,000 in less than 24 hours, crashing the coin's price and leaving users at a loss.

Consequently, the $DAVIDO token's rapid rise and fall highlight the risks associated with celebrity-endorsed cryptocurrencies. While the initial excitement can drive significant gains, the potential for pump-and-dump schemes remains high. Investors must exercise caution and conduct thorough research before investing in such tokens.