US SEC sets up own scam initial coin offering

US SEC sets up own scam initial coin offering

US SEC sets up own scam initial coin offering

The U.S. Securities and Exchange Commission wants to ensure investors can identify fraudulent initial coin offerings - even if it has to launch its own to do so. Click on Buy Coins and you will be hit with investor education tools and tips.

The SEC set up a website, HoweyCoins.com, that mimics a bogus coin offering to educate investors about what to look for before they invest in a scam.

"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. I encourage investors to do their diligence and ask questions".

"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.

Screenshot
The SEC's ICO education – Source

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. "But fraudulent sites also often have red flags that can be dead giveaways if you know what to look for". Stemming from a 1946 Supreme Court decision, EC v. W.J. Howey Co., the ruling has been that a transaction is an investment contract, or security, if "a person invests his money in a common enterprise and is led to expect profits exclusively from the efforts of the promoter or a third party".

Remember, a free and simple way to protect your money is to research investments and the people who sell them.

SEC said it spent "very little time" working up the site, which it said demonstrated how easily scam token sales could crop up.

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