The SEC has an investment opportunity you won't want to miss. Act now!
The United States Securities and Exchange Commission (SEC) has been targeting initial coin offerings that are either fraudulent, or offering unregistered securities as part of token sales, and has been warning potential cryptocurrency investors of potential scams.
As part of the SEC’s campaign to raise awareness and educate investors, they have launched a website called HoweyCoins.com that is designed to appear as if it is a token pre-sale for an initial coin offering being sold by a luxury travel company. The website – which the SEC says it threw together in-house with limited resources to show just how simple it is for scammers to create professional-looking websites – has all of the common incentives a fraudulent ICO might offer to lure investors.
The site features everything from a countdown timer for when the 15 percent token bonus ends, to flashy stock photography depicting luxurious locales, to a fake team of executives and whitepaper. It truly looks the part, however, when the ‘BuyCoinsNow!’ is clicked, the user is redirected to an educational portal design to inform potential investors about the various red flags to look out for when trying to identify if an offer is too good to be true. The SEC points out that promises of guaranteed returns, SEC-compliance, or celebrity endorsements are all warning signs to watch out for.
SEC Chairman Jay Clayton says the “rapid growth of the ‘ICO’ market, and its widespread promotion as a new investment opportunity, has provided fertile ground for bad actors to take advantage of our Main Street investors.” Clayton added:
“We embrace new technologies, but we also want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of fraud. Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws. I encourage investors to do their diligence and ask questions.”
Even the website’s name HoweyCoins, is a tongue-in-cheek reference to the Howey test – a test designed to qualify a transaction as an “investment contract,” stemming from the findings of the 1946 US Supreme Court case, SEC v. W.J. Howey Co.
The SEC suggests that before anyone invests in cryptocurrencies, specifically ICOs, to first visit their investor.gov portal to learn about the telltale signs of fraudulent investments.