The financial regulatory watchdog of the United States – Securities and Exchange Commission (SEC) has come out with an innovative approach towards educating investors and making them aware of ways to prevent falling in the trap of fraudulent ICO schemes. SEC, which has been combating ICO frauds over the last few months, itself released an ICO website called HoneyCoins.com.
— SEC_News (@SEC_News) May 16, 2018
This website is to give gullible investors an idea as to how genuine-looking ICO schemes are running a malicious campaign at the back. The SEC website shows an intersection between the travel and blockchain industry with several fake promises of outsized investment returns and benefits to the early backers.
Once you click on the “Buy New Coins”, you will be re-directed to the SEC page which states:
“If You Responded To An Investment Offer Like This, You Could Have Been Scammed – HoweyCoins Are Completely Fake! “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.”
The SEC in a statement said that the agency “was able to build the HoweyCoins website in-house in very little time, which demonstrates just how easy it is for someone to create a scam opportunity.”
The agency further added that “The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment.”
The SEC’s launch of a fake yet educational ICO website comes at the time of ongoing Consensus 2018 conference wherein a large number of industry players have flocked to the financial capital city of New York.
The SEC was also present during the event where Enforcement Division Cyber Unit chief Robert Cohen said that the agency is not willing to hinder innovation around new emerging technologies like blockchain. He said:
“The SEC has been open about meeting with people from the industry, to come in and meet with the staff, to talk about the ideas you have, the new developments, and have a dialogue about the new technology. The commission encourages ways to raise capital, we don’t regulate the technology — we regulate the financial industry and the markets.”
SEC Chairman Jay Clayton shared a similar view saying we encourage new technologies but also want investors to educate themselves and prevent being prey to such malicious schemes. Clayton said:
“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. Distributed ledger technology can add efficiency to the capital raising process, but promoters and issuers need to make sure they follow the securities laws. I encourage investors to do their diligence and ask questions.”
SEC Gets a Lot of Praise on Twitter for This Move
The regulatory agency has been praised by many crypto enthusiasts on Twitter for its novel idea of educating cryptocurrency investors. Ethereum co-founder Vitalik Buterin himself tweeted saying:
Great job on this! https://t.co/YgPvMFO8KD
— Vitalik "Not giving away ETH" Buterin (@VitalikButerin) May 16, 2018
Some more to follow
The SEC set up a fake ICO website that takes people to an informational page about the dangers of shitcoins when you hit the "buy coins now" button. Nothing like teaching people by owning them. pic.twitter.com/iQsm1SPrQV
— Ryan Mac (@RMac18) May 16, 2018
— Michael Thrasher (@Mike_Thrasher) May 16, 2018
— James Dennin (@JamesFDennin) May 16, 2018