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"

Weekly Newsletter

7 Arrested Following Kidnapping and Attempted 80 Bitcoin Ransom in India

Samuel Haig

Six men and one woman were arrested in India on July 14th for kidnapping three people in an attempted ransom that saw the assailants demand 80 bitcoins in exchange for their victims' safety.

The three victims were rescued after being held captive for more than 15 days following a 13-hour search operation of an 11-story apartment in Jaipur, the capital city of India’s Rajasthan state. Five of the individuals arrested are members of a gang based in the North Indian state of Haryana who have been involved with multiple cases of kidnapping, extortion, and robbery.

Kidnapper Accidentally Arrested During Search for Stolen SUV

Deputy commissioner of Jaipur West police, Vikas Sharma, stated that police accidentally encountered one of the abductors during the search for a stolen SUV traced to a township on the Ajmer highway. "When the police team entered the township, a man was seen fleeing. He was caught and upon questioning he told police that three men were held hostage in a flat for several days," he stated.

After using CCTV footage to identify the apartment blocks in which the captives were being held, deputy commission Sharma stated that  “Police teams from six police stations and commandos from anti-terror squad were called in for a search operation.”

The seven individuals arrested were identified as 21-year-old Jitendra Kumar, 22-year-old Deepak Kumar, 19-year-old Anupam Soni, 20-year-old Pawan Kumar, 19-year-old Bhawani Singh, 19-year-old Rahul Kumar, and 24-year-old Lokendra Singh. All of the kidnappers are from Haryana except for Lokendra Singh, who is from Rajasthan.

Jaipur police are yet to determine whether other individuals were also involved in the kidnapping.

Victims Were Tortured While Held in Captivity

Jaipur police revealed the identities of the three rescued individuals as 19-year-old Luftan Shaikh of Mahrashtra, 44-year-old Malang Shah of Andhra Pradsh, and 36-year-old Mohammad Shazad of Rajasthan.

Deputy commissioner Sharma stated that “The gang kidnapped Shaikh and Shazad, two bitcoin traders, and demanded 80 bitcoins worth ₹8 crore (approximately $1,165,880). Shah was kidnapped two days later. The gang demanded ₹10 lakh (roughly $14,573.50) from his family members.”

Luftan and his friend Shahjad were lured to Jaipur under the guise of an offer the purchase BTC below market value via an in-person transaction, while Shah, who operates a trust, believed he was traveling to Jaipur to negotiate a contribution.

Deputy commissioner Sharma stated that the kidnappers “wanted to extort money from the trio. They held them hostage in the flat and had threatened to kill them if the demands were not met. The victims told police of being badly beaten with “belts, sticks, and other things” during their captivity, with one individual left unable to walk properly.

Jaipur police also seized “two pistols, one country-made gun and three SUVs” during the operation.