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"

15 Nations Pledge System to Fight Cryptoasset Financial Crime

Neil Dennis

Fifteen countries have outlined plans to develop a system that can closely monitor cryptoasset transactions to help prevent money laundering and other criminal activity.

Countries including the G7 members, Australia and Singapore - along with global anti-money laundering body the Financial Action Task Force (FATF) - are to develop a system that will gather and share transaction details from individuals, according to a report by Japanese media company Nikkei.

Their short-term goal, the report said, is to announce detailed measures by 2020 and - in the longer term - launch the system a few years later. Once established, the system would be managed by the private sector.

FATF Guidance

Headquartered in Paris, FATF is an intergovernmental initiative of the G7 to advise on policy to help combat money laundering and the financing of terrorism. 

In June, the organization reported to the G20 Leaders' Summit on the impact of virtual assets on its mandate and recommended closer regulatory collaboration between countries.

Earlier in June it published Guidance For a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers in which it recommended that its 30 member nations must set out rules for cryptoasset service providers, including the monitoring and reporting of suspicious transactions and the sharing of data.

Recommendations

It required in particular:

  • The application of a risk-based approach for virtual asset financial activities and virtual asset service providers
  • Licensing or registration obligations
  • The monitoring or supervision of virtual asset service providers by a country's competent authority - not a self-regulatory body
  • A range of effective, proportionate and dissuasive sanctions to deal with virtual asset service providers that fail to comply with their anti-money laundering requirements, including the power to withdraw, suspend or restrict licensing or registration
  • Preventive measures such as customer due diligence, recordkeeping and transaction monitoring, among others
  • The provision of the widest possible range of international co-operation between countries and their regulators

Co-operation between the countries outlined in the Nikkei report would, therefore, appear to be a first step towards implementing the recommendations by FATF.