Howeycoins Goes Viral in Crypto Space As SEC Tries to Teach a Lesson
How easy is it to set up a fake ICO? Ask the SEC.
When it comes to the crypto space, it seems every day brings another scam. Considering many people don’t seem to be heeding the warnings and avoid being duped, regulators in the U.S. set out to teach folks a lesson.
This week, the agency set up a website that features an ICO. Sounds odd, and it’s also fake.
Most of all, however, the site is meant to show just how easy bad actors can set up shop with jazzy offerings so they can rip people off.
Howeycoins from the SEC
Last year was the year of the ICO. They were popping up like weeds, as everyone thought they could hold an offering to raise funds for their projects. The go-to means to promote their offerings was to create a website that often did the trick in getting people to invest.
Recognizing that so many people were falling for the ICO website trap, SEC officials thought to set up a site that includes all the “gotcha” features the scammers put on their sites.
It’s called Howeycoins. To novice investors, and even experts, this site looks completely legitimate. However, when giving it a closer look, you can see some red flags.
Here’s a sampling of some of the claims made on the site.
- HoweyCoins are officially registered with the U.S. government;
- HoweyCoins will trade on an SEC-compliant exchange where you can buy and sell them for profit;
- HoweyCoins can be used with existing points programs;
- HoweyCoins can be exchanged for cryptocurrencies and cash;
- HoweyCoins can be spent at any participating airline or hotel;
- HoweyCoins can also be redeemed for merchandise.
The officials decided to name the site HoweyCoins based on a formula the U.S. Supreme Court ruled on to determine how to classify investment contacts.
Spreading the word
The SEC’s chairman Jay Clayton continued to stress this week that ICOs must be carefully investigated by investors. He touted this website as the regulating body’s latest effort to educate investors.
Clayton took particular issue with ICOs in which the organizers try to pressure investors into buying into their schemes. One method is to offer a discount.
He said frankly:
“Buy at a 25% discount today because tomorrow it’s going to be full value? Are you kidding me? The fact that our staff could put together something that looks just like an ICO in very little time and with very little resources shows how little you have to put into this to market a token.”
Although the SEC has set up this site to show how not to be duped, it’s still not put in place firm guidelines on how to regulate the crypto space. It’s still handling bad actors on a case-by-case basis.
Earlier this year, we told you about Clayton and the chair of the U.S. Commodity Futures Trading Commission, J. Christopher Giancarlo, going before members of Congress to discuss cryptos.
During the discussion, the pair told the panel about how they were gingerly handling the our space not only because of its newness, but also because of the unique opportunities that it presents.
They pointed out that while they hadn’t slapped extensive regulations on those operating in the space, they had put in place tools to catch the bad actors, and put an end to any criminal acts they were committing.