The Nigerian securities regulator has issued a warning against Zugacoin and Samzuga GPT, labeling them as unauthorized crypto operations.
Memecoins Tied to Pump-and-Dump Schemes
The Securities and Exchange Commission (SEC) of Nigeria has recently issued a public warning regarding Zugacoin and Samzuga GPT, identifying them as unauthorized crypto operations. The SEC emphasized that the promoters and issuers of these digital assets are not registered to operate within the Nigerian capital market, and the assets are not approved for public issuance.
The SEC’s investigation revealed that both Zugacoin and Samzuga GPT fall under the category of “meme coins.” These meme coins are often characterized by a lack of genuine use cases, intrinsic value, or tangible projects to support them.
According to the SEC, meme coins derive their value from the efforts of promoters or the community, making them vulnerable to pump-and-dump schemes. In such schemes, false information is disseminated to artificially inflate the prices of the coins, allowing promoters to sell their holdings at inflated prices, resulting in significant losses for unsuspecting investors.
The SEC’s warning comes shortly after it issued a caution against Crypto Bridge Exchange (CBEX), which reportedly resumed operations in Nigeria. CBEX was allegedly requiring investors to pay certain fees before processing withdrawals, prompting the SEC to take enforcement action against the exchange and its promoters.
The SEC is working in conjunction with law enforcement agencies to investigate CBEX/ST Technologies International Ltd. and take necessary actions in accordance with the Investments and Securities Act 2007. The commission also stressed the importance of verifying the legitimacy of any crypto, virtual, or digital asset offerings and advised investors to check the registration status of promoters and trading platforms through the SEC’s dedicated portals.