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"

Texas Lawmaker Proposes Banning Anonymous Cryptocurrency Transactions

  • Phil Stephenson, a Republican member of the Texas House of Representatives, has suggested banning anonymous crypto transactions.
  • Anonymous crypto transactions pose risks such as people using them to engage in illicit activities, the bill noted.

Phil Stephenson, a Republican member of the Texas House of Representatives, has submitted a bill that would require residents of the US state to provide identity verification information before conducting cryptocurrency transactions.

Referred to as H.B. No. 4371, the bill states that individuals who are sending and receiving cryptocurrencies must make their identities known - prior to engaging in such transactions.

The bill also notes that people who are using a “verified identity” cryptocurrency need not supply identity verification documents before conducting transactions.

Notably, Texas could become the first US state to prohibit the anonymous use of cryptocurrencies should Stephenson’s bill be approved. As mentioned in H.B. No. 4371, the bill will take effect on September 1st, 2019 - if it’s approved and becomes law.

Individuals Engaging In Crypto Transactions Must Make Their Identities Known

Stephenson, a certified public accountant (CPA), has noted in section 662.02 of the bill that before accepting a payment in cryptocurrency, the recipient of the transfer must verify the identity of the person sending them the funds. However, the bill proposed by Stephenson clarifies that individuals are “not required to verify the identity of a person sending payment if the payment is sent by a verified identity [crypto]currency.”

H.B. No. 4371 also states that the relevant agencies mentioned will be required to provide users with the appropriate tools so that they are able to distinguish between an anonymous crypto transaction and one where the users have made their identities known. Commenting on the bill H.B. No. 4371, Andrew Hinkes, the co-founder and general counsel at Athena Blockchain, remarked (via Twitter): 

Congratulations Texas, you’re the first state to formally attack and attempt to ban anonymous use of cryptocurrency in the US.

Hinkes further noted: “Other questions: Would any existing cryptocurrency or digital currency qualify as a ‘verified identity digital currency’ as defined? What level of ‘ID’ is required to be ‘verified’? State issued? Are four state administrative bodies the right entities to ‘promote’ a digital currency?”

Last week, several members of France’s National Assembly had been discussing the potential prohibition of certain privacy-oriented cryptocurrencies including monero (XMR), zcash (ZEC), PIVX, and DeepOnion. French lawmakers have published a 150 page document titled “Virtual Monies” - which they presented recently to the nation’s lower house of parliament.

Banning Privacy-Oriented Cryptocurrencies In France

The report’s authors, Éric Woerth and Pierre Person, have provided basic explanations of how blockchain technology works and how the Bitcoin protocol was initially proposed through the Bitcoin whitepaper by its pseudonymous creator, Satoshi Nakamoto.

Additionally, the report highlights what may be considered inherent risks associated with using anonymous cryptocurrencies such as being able to use them to carry out illicit activities including money laundering and financing drug and human trafficking.