SEC conjures up HoweyCoins ICO hoax to warn investors of bad actors


“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.”

Sound too good to be true? Well, it is. HoweyCoins is a fake, created by the SEC to raise awareness of scammers and malpractice among ICO token sales.

Anyone who clicks on the ‘token sale’ button gets redirected to a stern Investor.gov page which doesn’t offer the gains promised, but instead offers best practices and red flags for investors on blockchain fraudsters.

These include:

  • Claims of high, guaranteed returns: “Most fraudsters spend a lot of time trying to convince investors that extremely high returns are ‘guaranteed’ or ‘can’t miss’, as the SEC puts it
  • Celebrity endorsements: “It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment”
  • Credit card investment: “Most licensed and registered investment firms do not allow their customers to use credit cards to buy investments or to fund an investment account”

Other issues the Commission made aware on its bogus website included the ubiquitous whitepaper – “a complex yet vague explanation of the investment opportunity” – as well as pump and dump scams and promised SEC compliance.

To the SEC’s credit, plenty of effort has gone into the hoax. The pictures of HoweyCoins’ ‘employees’ are originals – although it’s worth pointing that the names on the image URL are different from those on the page. Indeed, ‘Josh Hinze’, co-founder and head architect at HoweyCoins, is really Owen Donley, chief counsel at the SEC’s Office of Investor Education and Advocacy, while the company name is a play on the Howey Test, a test for determining whether certain transactions qualify as ‘investment contracts’.

This can be another alarm bell: many rogue companies simply reuse old stock photos, inventing more employees than they actually have. A Google reverse image search can swiftly weed out those bad actors however.

“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,” said Jay Clayton, SEC chairman. “Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws.”

You can take a look at ‘HoweyCoins’ here.


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