US SEC sets up own scam initial coin offering

Galtero Lara
May 17, 2018

Check out the SEC's Office of Investor Education and Advocacy's mock initial coin offering (ICO) website that touts an all too good to be true investment opportunity.

The fake offering has been called Howey Coins, a reference to the "Howey test" that came out of a 1946 court ruling and is used to determine whether a transaction is an investment contract or not. Click on Buy Coins and you will be hit with investor education tools and tips.

According to the HoweyCoin website, most travel businesses "require processing, centralized currency, and most importantly, nickel and dime fees that add up to literally billions".

"We've recently seen fraudsters pretending to be involved in blockchain technology, initial coin offerings and crypto-currencies - when really they are simply operating scams created to take investors' hard-earned money", says the site.

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The site similarly features Twitter testimonials and list of its team members, though whether any of them are real is debatable - there are no social media or professional profiles linked to the names.

"Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals", said Owen Donley, Chief Counsel of the SEC's Office of Investor Education and Advocacy, who doubles as "Josh Hinze" on the HoweyCoins website.

SEC said it spent "very little time" working up the site, which it said demonstrated how easily scam token sales could crop up.

The site then goes on to describe a handful of red flags that signal a scam including claims of high, guaranteed returns, celebrity endorsements, claims of SEC compliance, ability to invest with a credit card and pump and dump schemes.

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