If you've ever been tempted to buy into a hot investment opportunity linked with luxury travel, the Securities and Exchange Commission has a deal for you. We've recently seen fraudsters pretending to be involved in blockchain technology, initial coin offerings, and crypto-currencies - when really they are simply operating scams created to take investors' hard-earned money.
The Securities Exchange Commission, a USA regulatory branch charged with investigating fraudulent ICOs, has created their own ICO web page to show potential investment victims the obvious signs of scam offers.
That opportunity is HoweyCoins, "an all too good to be true investment" that "isn't real", the release admits.
The HoweyCoin website is the latest and certainly the smartest attempt by the SEC to warn investors about the investment and fraud risks associated with ICOs.
"The rapid growth of the "ICO" market, and its widespread promotion as a new investment opportunity, has provided fertile ground for bad actors to take advantage of our Main Street investors,"said SEC Chairman Jay Clayton". "We embrace new technologies, but we also want investors to see what fraud looks like" said Clayton, quoted in the SEC announcement.
The site, HoweyCoins.com, mimics a coin offering, proclaiming, "Combining the two most growth-oriented segments of the digital economy - blockchain technology and travel, HoweyCoin is the newest and only coin offering that captures the magic of coin trading profits AND the excitement and guaranteed returns of the travel industry".
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.
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"Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals", SEC's office of investor education and advocacy chief counsel Owen Donley said.
The SEC's spoof ICO launch, HoweyCoins website breaks down the red flags of fraudulent fundraising to educate potential victims.
The HoweyCoins site hits on several tell-tale signs of a scam. The agency which regulates financial contracts in the United States launched its own Initial Coin Offering today, complete with an unintelligible white paper, an attractive "investment ladder", and outlandish returns of 2 percent per day. Anxiety-inducing countdown clock? Check.
HoweyCoin even has endorsements from athletes, social media influences, and other celebrities who are obviously the top authorities on the quality of the underlying technology.
While those attributes don't necessarily mean the offering is bogus, it's wise to be aware - and skeptical. That seemed to be one of the few quibbles from Reddit connoisseurs, one of whom argued that the website was a bit corporate, lacking the hipster touch and "the stupid effects ICO webdevs put on". Howey is derived from the landmark 1946 U.S. Supreme Court decision, SEC v. W.J. Howey Co.
ICOs are usually offered for a fixed time, and in return for investors handing over standard cryptocurrencies including Bitcoin (BTC) and Ethereum (ETH), they are given a form of branded cryptocurrency token.