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"

Malta's Financial Watchdog Warns Against Two Cryptocurrency Exchanges

Malta’s financial watchdog, the Malta Financial Services Authority (MFSA), has issued statements against two cryptocurrency trading platform that reportedly don’t have licenses to operate in the country.

The MSFA, over two warnings, warned against both Crypto Foxtrades and COINMALEX.0 In the first warning the financial watchdog wrote it was aware Crypto Foxtrades claims to be “a licensed and regulated trading platform that serves over 500,000 customers globally,” and that it purports to be “licensed and regulated” by the MFSA.

The regulator warned the public against “undertaking nay business or transaction” with the entity operating Crypto Foxtrades, writing:

The MFSA wishes to alert the public, in Malta and abroad, that Crypto Foxtrades is NOT a Maltese registered Company NOR licenced or otherwise authorised by the MFSA to provide the service of an exchange or other financial services which are required to be licenced or otherwise authorised under Maltese law.

The second warning saw the MFSA write that it has become aware of COINMALEX, which claims to offer “trust assets management of the highest quality on the basis of profitable CryptoCurrency trading through Crypto exchanges”.

The organization states it operating from Malta, but the MFSA issued a similar warning to the public against using it as it isn’t licensed or authorized to operate in the country, clarifying it “does not believe” it operates from an address in Malta.

The MFSA added.

Furthermore, information available to the MFSA suggests that COINMALEX is likely to be a scheme of dubious nature with a high risk of loss of money.

On both warnings, Malta’s financial watchdog advised the public to be “extra cautious” when the entity offering financial services approaches them “via unconventional channels such as telephone calls or social media.

Earlier this year, the MSFA said leading cryptocurrency exchange Binance wasn’t authorized to operate in the country. On social media its CEO Changpeng Zhao responded saying to reports on the statement from the MFSA saying there was a “mix of truth, FUD & misconception” circulating.

Featured image via Pixabay.