ICO is the hottest way for blockchain startups to raise funds. Companies can issue a token sale, which the investors would purchase the tokens using digital assets like bitcoin or ether. Launching an ICO project does not need to go through the same regulatory process like an IPO. Therefore, scams related to cryptocurrency are common, and given that the ICO trend is still booming, new types of crypto/ICO scams can be expected.
The SEC is the official agency in the U.S. that regulates ICO. Instead of releasing a boring 10-page reports on ICO scamming alerts, the SEC came up with a rather creative way to educate investors on fraudulent ICO – by launching its own (fake) ICO.
The SEC’s HoweyCoin “utilize the latest crypto-technology to allow travelers to purchase all segments without these limitations, allowing HoweyCoin users to buy, sell, and trade in a frictionless environment – where they use HoweyCoins to purchase travel OR as a government-backed, freely tradable investment – or both!” Sounds cool right? On HoweyCoin’s website, the ICO issuer tells us that it is fully approved by the SEC, with its own whitepaper and endorsements from industry/social leaders. Moreover, investors who invest in HoweyCoin will be “guaranteed” a 1-2 percent returns and enjoys high annual growth, etc. It is all too good to be true!
Generally, a fraudulent ICO project contains a whitepaper filled with complex yet vague languages, and lots of promises. The team that runs the project may look highly promising, with each of them claiming to be industry leaders (but you can’t find anything on them via the internet). Fortunately, investors who fell into the howeycoin scam will be redirected to SEC’s educational site. However, other ICO scams will be vicious and Investors should apply risk-based judgements and invest carefully.