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"

Kraken Facing Increasing Compliance Costs As Law Enforcement Enquiries Surge 50%

Popular cryptocurrency exchange Kraken revealed it received 49% more law enforcement inquiries from regulators throughout the world in 2019 as compared to 2018.

The cryptocurrency trading platform shared an infographic from its “2019 Transparency Report” on social media, revealed last year it received a total of 710 requests, while back in 2018 the number of requests received was of 475.

Around 61% of the requests Kraken received in 2019 came form law enforcement agencies in the United States, with the Federal Bureau of Investigation (FBI) sending 116 requests, the Drug Enforcement Administration (DEA) sending 73, and the Department of Justice (DOJ) sending 28, among others. The Securities and Exchange Commission (SEC) sent Kraken 20 requests.

Most of these requests were only targeting one account, although 28 requests were eyeing over 11 accounts on the cryptocurrency trading platform. While U.S. agencies made up the majority of requests, Kraken noted other countries are catching up, which is driving compliance costs up.

Last year, Kraken noted various businesses choose to block U.S. users over compliance costs, as the government’s subpoenas become an entry barrier. Kraken is well-known for criticizing U.S. regulators’ approach to the cryptocurrency space, specifically when it came to New York’s BitLicense.

Last year its CEO Jesse Powell fired back against New York’s Attorney General after refusing to cooperate with a formal inquiry that requested a large volume of data from 13 of the world’s largest exchanges.

Featured image via Pixabay.