U.S Securities And Exchange Commission Creates Mock ICO Website To Show Investors How To Identify Fraud

The Securities and Exchange Commission (SEC) regulatory authority in the U.S has launched a simulated ICO website designed to teach investors how to identify fraudulent ICOs.

HoweyCoins.com was launched by the Investor Education and Advocacy unit of the SEC. The mock website is cleverly made to look like a genuine website, thus mimicking one of the tactics used by scammers to rope in unsuspecting investors and trick them into thinking that they are legitimate.

The mock website advertises a false ICO offering that even features a pre-sale discount timer. The website even has a detailed whitepaper that is also downloadable false testimonials that look very convincing.  However, once users click on the “buy coins now” section, they are routed to Investor.gov which warns them that they would have been scammed and proceed to provide information on how to identify illegitimate ICOs.

HoweyCoins website clearly explains the dangers of investing without doing proper research. For example, fraudulent ICOs are usually characterized by elaborate whitepapers and guaranteed high returns among other things. The SEC selected the name “Howey” from the Howey test used in the landmark Supreme Court ruling case of SEC vs W.J. Howey Co., in 1946.

Jay Clayton, the chairman of the SEC stated that the ICO market has been growing rapidly and has been promoted heavily as a new type of investment opportunity. This has created opportunities for scammers to take advantage of unsuspecting investors. The SEC chairman pointed out that the regulatory authority embraces new technology but that it created the website so that it could explain how ICO scams work.

Clayton also acknowledged that Decentralized Ledger Technology (DLT) provides efficiency in the process of raising capital but he also feels that promoters should follow the laws governing securities. The SEC’s mock ICO website echoes the speech made by SEC commissioner M. Peirce a few days ago through which he advised investors to exercise caution when dealing with cryptocurrencies. He also talked about the role of regulatory watchdogs in monitoring the markets.

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