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"

Former Mt Gox CEO to Appeal Data Manipulation Conviction

Mark Karpeles, the former chief executive officer of the now-defunct cryptocurrency exchange Mt Gox, is reportedly planning to appeal the data manipulation conviction it recently received from a Japanese court.

As recently reported, the Tokyo District Court found Mark Karpeles guilty of charges relating to data manipulation and gave him a suspended sentence of two and a half years, while requiring him to maintain a clean record for four years to avoid jail.

Karpeles was notably not found guilty of charges of breach of trust and embezzlement, something his lawyer, Nobuyasu Ogata, welcomed. Ogata, however, defended Karpeles’ actions after Mt Gox was hacked for over 850,000 BTC at the time, claiming they were an effort to minimize damage.

Per his words, such actions can’t be seen as illegitimate, and authorities were confused as to how crypto exchanges worked and ended up blaming the cybercrime’s victim for Mt Gox’s demise.

Karpeles, a 33-year old Frenchman, was facing 10 years in prison before being found guilty of data manipulation, as prosecutors were looking for more. He was arrested in August of 2015, after Mt Gox collapsed in 2014. At the time, the exchange handled 70% of bitcoin’s total trading volume.

He reportedly decided to appeal as he believes the judge didn’t fully look at the defense’s arguments. Speaking to The Associated Press, he stated:

During the opening of my trial in 2017, I swore to God that I am innocent of all charges. (…) I believe appealing to the judgment is appropriate so that I can be judged again in full consideration of all the facts.

Those who lust funds during the collapse of Mt Gox have last year seen a positive development, as the case was moved to civil rehabilitation, allowing creditors to be paid back in BTC instead of its fiat value at the time, of about $500.

Since the incident Japanese authorities have started dipping their toes in the cryptocurrency space. The country’s Financial Services Agency (FSA) has required crypto operators to register with it, and bitcoin has been a legal payment method in Japan since April of 2017.