Please share if you find this article interesting.
SEC Launches Mock ICO to Show Investors Warning Signs of Fraud
Office of Investor Education and Advocacy at the US Securities and Exchange Commission (SEC) has launched a fake initial coin offering (ICO) website, according to a press release May 16. The goal of the site is to increase awareness of the typical warning signs of scam ICOs and to promote investor education.
— SEC_News (@SEC_News) May 16, 2018
The mock website HoweyCoins.com represents a classic example of a fraud ICO website that touts an “all too good to be true investment opportunity.” The website includes such details as a misleading and blurry white paper, guaranteed returns claims, celebrity endorsements, and a countdown clock that is “quickly running out on the deal of a lifetime.”
When a user clicks on “Buy Coins Now,” they are lead to the website Investor.gov, which was established by the SEC to help investors avoid fraud. The site warns that if users would have responded to an investment offer like HoweyCoins, they “could have been scammed.”
SEC Chairman Jay Clayton emphasized that the agency supports the adoption of new technologies, but it also encourages investors to educate themselves and understand what fraudulent offers look like:
“We embrace new technologies, but we also want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of fraud. Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws. I encourage investors to do their diligence and ask questions.”
Owen Donley, Chief Counsel of the SEC’s Office of Investor Education and Advocacy, noted that a fraudulent ICO website can be set up in a very little time, which illustrates how easy and fast it can be to launch another scam offer. “Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals,” Donley said.
Earlier this week, Cointelegraph reported that three co-founders of cryptocurrency startup Centra Tech have been formally indicted for running a fraudulent ICO. Centra Tech’s ICO raised $32 mln from investors in 2017. The Florida-based founders misled investors by claiming that they had partnered with Visa and Mastercard to issue virtual currency debit cards.
Late last month, SEC Commissioner Robert Jackson expressed criticism of ICOs in general, claiming that investors “are having a hard time telling the difference between investments and fraud.” He further stated that the ICO market is a prime example of what an unregulated securities market would look like.
Author: Cointelegraph By Helen Partz
Found this article interesting? Kindly share it on Social Media.