Interested in cryptocurrency but fearful of investing in fake cryptocurrencies? The SEC is trying to help, launching a site that highlights some of the fraudulent tactics that fake sites use to scam honest investors out of their money. Meet HoweyCoin, the fake cryptocurrency designed to show investors how to avoid other fake cryprocurrencies. This story comes from NewsBTC.
SEC Launches Fake ICO to Educate Investors
The Securities Exchange Commission, a US regulatory branch charged with investigating fraudulent ICOs, has created their own ICO web page to show potential investment victims the obvious signs of scam offers. HoweyCoin is presented as a way to invest in the luxury travel market and the ICO promises a 25% discount to gold level investors through the site as reported in the The Wall Street Journal.
ICOs are a popular but still unregulated way for startups to raise funds which according to the SEC have generated $12 billion in revenue so far in 2018. They are also a proven way for scammers to get to non-savvy investors who want to tap into the rumored high returns possible with cryptocurrency.
The SEC’s fake HoweyCoin takes its name from the 1946 four-part Howey test established to determine what qualifies as a security. In the ongoing process of regulating cryptocurrency, the SEC has been recommending that exchanges use this test as a guide for whether a coin falls under the existing securities regulations or not.
In 2017 the regulator established a dedicated cyber unit to combat fintech and cyber-related crimes. Since it’s creation the unit has been actively focusing on ICOs as the largest potential threat to investors.
The HoweyCoin site seems as legitimate as any other ICO landing page. It features a countdown clock showing how much time is left to get in on the discounts and outlines different levels of investment against images of tropical islands and foaming champagne. When clicking through there is even a white page and a list of (fake) celebrity investors but when the Buy Coins Now button is clicked the user is brought to a page outlining the scam.
Once on the Investor.gov page, the warning signs of a fake ICO are highlighted in red and include particulars like celebrity endorsements, high returns, regulatory compliance and options to pay with a credit card. The top of the page warns: “If You Responded To An Investment Offer Like This, You Could Have Been Scammed – HoweyCoins Are Completely Fake!”
Kind of an interesting tactic employed by the SEC. We hope it’s effective. Eliminating scams is one way to ensure cryptocurrencies continue to grow. Your thoughts?