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"

VanEck and SolidX Launch Institutional Bitcoin Product Within SEC Rules

Neil Dennis

Two financial firms that have previously had efforts to issue a bitcoin exchange traded fund (ETF) blocked by US regulators are to launch a similar, but more limited, option this week.

VanEck Securities and SolidX Management tried in the summer of 2018 to register the VanEck SolidX Bitcoin Trust ETF, but the Securities and Exchange Commission (SEC) has continued to delay its decision over concerns that manipulation in the primary market could place inexperienced retail investors in danger of significant losses.

Institutional Buyers

However, VanEck and SolidX announced on Tuesday (September 3) that "the VanEck SolidX Bitcoin Trust (the Trust) will issue shares (the Shares) to Qualified Institutional Buyers (QIBs) in accordance with Rule 144A under the Securities Act of 1933, as amended (the Securities Act)." These shares will "provide institutional investors access to a physically-backed bitcoin product that is tradeable through traditional and prime brokerage accounts."

Jan van Eck, the CEO of VanEck, said:

Institutional demand for bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available. We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework.

But financial lawyer Jake Chervinsky took to Twitter to clarify some details about the offering. He said that it was not an ETF and calling it a "limited ETF", was just a "cute marketing strategy".