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"

New York Court Asserts Jurisdiction Over Bitfinex Proceedings

Samuel Haig

On Aug. 19, New York Supreme Court Judge Joel Cohen rejected Bitfinex and Tether’s motion to dismiss the case filed against the companies by the New York Attorney General (NYAG).

The NYAG invoked the 1921 Martin Act to assert jurisdiction over the proceedings, however, the cryptocurrency exchange and stablecoin issuer's legal representation had sought to argue that the court does not have jurisdiction over the case, claiming that it did not operate in New York nor serve any New York-based customers during a hearing on July 29. In response, the NYAG has argued that it is “premature” for the court to make rulings regarding the case’s jurisdiction during an ongoing investigation.

While the court expressed its disagreement with the NYAG’s assertion that it is premature to make jurisdictional rulings, the judge found that “based on the evidence and applicable law” that it does have jurisdiction and “a clear statutory mandate” to adjudicate the case.

As such, the court denied Bitfinex’s motion and has ceased the temporary stay of the investigation, giving Bitfinex and Tether 90 days to provide documentation requested by the NYAG.

Bitfinex/Tether Spent Over $500,000

At the end of July, Bitfinex and Tether’s representation filed a letter with the court claiming that it had already spent $500,000 in attempting to respond to the NYAG’s document demands.

The letter also asserted that the companies would appeal a decision by the supreme court to deny the motion to dismiss the case.