In a bid to raise awareness of potential investment scams in the cryptocurrency space, the U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy have launched a fake website posing as a luxury travel firm kicking off the pre-sale portion of their initial coin offering (ICO).
The website HoweyCoins.com, is a tongue-in-cheek play on everything your run-of-the-mill bogus ICO offers. From ‘too-good-to-be-true’ promises, to flashy images of champagne bottles and palm trees, to convoluted and often-plagiarized whitepapers, to pre-sale bonus countdown clocks, the SEC’s spoof site has got all of the common enticements found on fraudulent sites.
In a press release titled “The SEC Has an Opportunity you Wont Want to Miss: Act Now!” SEC Chairman Jay Clayton explained the motivation behind HoweyCoins:
“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,” with Clayton adding:
“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.”
Anyone who clicks on the “Buy Coins Now!” Button will be redirected to educational materials from the SEC warning users of potentials scams and what red flags to look out for. Some of the red flags outlined include celebrity endorsements, claims of guaranteed returns, claims of SEC-compliance, and more.
Even the site name HoweyCoins is an Easter egg referencing the “Howey test” – a test created by the Supreme Court stemming from the SEC v. W.J. Howey Co. case in 1946, aimed at determining whether a financial transaction qualifies as an “investment contract.”
Who knew the SEC was this funny? Still, fraudulent investments are no laughing matter, and the SEC has done a solid job at raising awareness of the potential pitfalls of cryptocurrency investing, all while serving as an entertaining break from the daily grind.