SEC Launches its Own Fake ICO as Warning to Investors

Avi Rosten
  • The SEC's very own coin named "HoweyCoin" comes complete with a website featuring a team, testimonials and a whitepaper
  • The regulator hopes the fake coin will educate would-be investors about fraudulent ICOs

The SEC (The US Securities and Exchange commission) has today announced an intriguing new initiative designed to educate investors about fraudulent ICOs.

The regulator has launched its own ICO - HoweyCoin - complete with a website showcasing the ICO pre-sale, team, whitepaper - and even tweets touting the potential of the new coin.

The coin aims to revolutionize the travel business, explaining that most travel businesses need “processing, centralized currency and…nickel and dime fees that add up to literally billions.”

Howeycoin differs, however, because:

“HoweyCoins utilize the latest crypto-technology to allow travelers to purchase all segments without these limitations, allowing HoweyCoin users to buy, sell, and trade in a frictionless environment – where they use HoweyCoins to purchase travel OR as a government-backed, freely tradable investment – or both!”

HoweyCoin

The twist is that HoweyCoin is fake - and users who try and invest in the sale are redirected to the SEC’s educational site which reads:

“If You Responded To An Investment Offer Like This, You Could Have Been Scammed – HoweyCoins Are Completely Fake!”

SEC

Presumably named after the legal “Howey test” that the SEC uses to determine whether a financial instrument is a security, the ICO claims that investors can expect to receive 1-2% returns and offers token sale discounts to early investors alongside pictures of exotic locations.

In a press release, the SEC explained that the whitepaper included on the site was designed to mimic other whitepapers, and features:

“a complex yet vague explanation of the investment opportunity, promises of guaranteed returns, and a countdown clock that shows time is quickly running out on the deal of a lifetime."

SEC

While many within the crypto world regularly express their discontent with regulatory bodies and see them as stifling the industry, this latest move from the SEC will no doubt serve as an important warning to would-be investors, and might at least raise a smile from the regulator’s detractors.

Featured Image Credit: "Securities and Exchange Commission" by "Scott S" via Flickr; licensed under "CC BY 2.0"

Canada: Crypto Exchanges Must Comply With Financial Watchdog By June 2020

  • Canada is requiring crypto exchanges to be in compliance with FinTRAC by June 2020.
  • New regulation is apart of a set of laws to crack down on money laundering. 

Canada has imposed a sweeping regulation that will require cryptocurrency exchanges to be in compliance with a local watchdog regulator by June 2020. 

Canadian Crypto Exchanges

According to a report published on July 10, crypto exchanges operating in Canada will be forced to register with the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) by June 2020.

The amendment on cryptocurrency exchange regulations is apart of a broader set of laws by the Canadian government to crack down on money laundering

Canada is looking to impose the growing trend of Know Your Customer (KYC) regulations on cryptocurrency exchanges, which require the organizations to collect pertinent information on clients. Given the propensity for money laundering and drug trafficking through crypto exchanges, Canada is hoping to curve the use of decentralized currencies for illicit behavior through greater law enforcement. 

In addition to supplying information on customers, crypto exchanges operating in Canada will be required to report suspicious behavior to FinTRAC and keep detailed records of transactions. 

While the movement appears from the outside as a crackdown by Canadian authorities, it is reportedly motivated out of an attempt to spur banks into taking greater interest in cryptoassets.

Money Laundering Concerns

Lori Stein, a partner at business law firm Osler, Hosking & Harcourt, said that Canada has long been concerned with the risk of cryptocurrency being used for money laundering and funding terrorist organizations. 

Stein said, 

“The hope is that now that there is going to be a requirement to register and comply, and oversight by FinTRAC, that banks and other financial entities are going to be more open to providing services to and dealing with virtual-currency businesses.”

Stein anticipates that increased regulations will lead to the exclusion of certain global cryptocurrency exchanges. However, the Canadian marketplace will have to bear the burden of lost crypto transactions in order to maintain adequate oversight. 

More concerning for the crypto ecosystem is the anticipated loss of cryptocurrency users. While Canada’s new policies will enforce tighter regulations on exchanges, it also has the effect of ostracizing clients interested in anonymity and truly decentralized platforms. 

As crypto continues to gain prominence globally, governments will be forced to balance the desire for regulatory supervision without impeding digital currency innovation.