The U.S. government wanted to teach cryptocurrency investors a lesson, and it did. The Securities and Exchange Commission (SEC) created a fake initial coin offering (ICO) site to see how many investors will take the bait. Unfortunately, many people were tricked by it.
The scammy site is dubbed Howey Coin after the Howey Test the regulator uses to identify securities among investments. When an investor hits the “Buy Coins Now” button, he or she will be redirected to an educational page on the bogus website.
The SEC explains that the fake website is a decoy meant to be an educational tool to teach potential investors about the risks of digital assets like ICOs and cryptocurrencies. The agency offers a list of red flags that appear in case of a fraud:
- Most fraudsters promise high returns but fail to mention the high risks, make false claims, or brag about celebrity endorsements, according to the SEC.
- In many cases, ICOs are touted as SEC-compliant, which is false.
The bogus website offers visitors a false white paper, offering more details on the cryptocurrency and the technology behind it. To make the stunt more real, the SEC generated several false Twitter accounts of stars that have endorsed the fake digital coin.
Overall, the fake looks like the real deal, so it is no wonder why so many people fell for it.
The fake ICO website promises that HoweyCoins can be traded on exchanges vetted by the SEC and can be turned into cash, other cryptocurrencies, merchandise, or services. Also, the fake digital coin site claims that the new currency is registered with the federal government.
The SEC also promises “unsurpassed travel savings” for HoweyCoins investors, with one fake celebrity claiming that the new digital coins will “change the travel landscape forever.”
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