The SEC Makes A Fake Cryptocurrency, HoweyCoin Offers Pre-ICO Coins to Investors
A new digital currency HoweyCoin was launched by the Securities and Exchange Commission of the US today. The currency’s website is now offering a pre-initial coin offering to the investors. It claims to be a currency that will be “standard for the travel industry.’ The coin is also offering several discounts and a variety of investment levels to investors.
However, this currency is FAKE.
When you click on “Buy Coins Now!” button you are taken to the SEC’s website which tells you about common strategies that ICO scammers use to dupe people of their money. The coin was launched by the SEC to showcase that investors are always at a major threat when they are partaking in a digital coin offering.
As the number of fake cryptocurrencies have increased, costing millions of dollars to unsuspecting investors, the regulator has been issuing several warnings. This hasn’t stopped people from investing in these unregistered securities. Therefore, the regulator found it relevant to showcase the idea with the help of its own fake digital coin. It went as far as creating a whitepaper for this fake offering.
The site says, “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 designed to take investors’ hard-earned money. We created the bogus HoweyCoins.com site as an educational tool to alert investors to possible fraud involving digital assets like crypto-currencies and coin offerings.”
After this warning, the regulator carefully describes the way in which scamsters operate these schemes. It talks about a few red flags like guaranteed returns, celebrity endorsements, SEC compliance claims, unusually high return, pump and dump schemes as well as the ability to invest with a credit card. The regulator says that the presence of any of these signs should alert the people about the legitimacy of the coin that they are buying.
It also explains pump and dump schemes in detail. The site says, “In a pump and dump scheme, fraudsters typically spread false or misleading information to create a buying frenzy that will ‘pump’ up the price of a stock and then ‘dump’ shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls and investors lose money.”
The regulator has been adopting a very strict stance on cryptocurrencies lately. However, a primary cause of its concern has been ICOs or Initial Coin Offering. This is a fundraising method through which new currency coins are offered to investors in lieu of established cryptocurrencies like ethereum or credit card payments. Once the desired funds have been collected, the companies do nothing. Most of the fraudulent companies offering these coins have no real business and are designed almost overnight to extract money. In a recent case, three founders of a crypto company were arrested in Florida as they created a fake company, complete with unreal executive team and a plot to kill all the fictitious characters.