SEC Creates a Fake ICO Website to Warn and Educate Investors
Over increasing reports of ICO scams over the past few months, the U.S regulator - Securities and Exchange Commission (SEC) has been issuing repeated warnings to investors on this matter. This time the agency has taken a novel approach towards educating people regarding ICO frauds.
The SEC has released a spoof cryptocurrency website called HoweyCoins.com. As the first instance, you will be seeing a somewhat authentic marketing appeal to lure investors under various schemes and promising the early-backers with quicker and faster returns. Interestingly, in the “Meet The Team” section, the SEC has put its own employees in the role of cryptocurrency developers.
Once you scroll down on the website, check different investing options and click the “Buy New Coins” button, you will be redirected to a website investor.gov where the ice breaks and you are informed that this is how gullible investors get trapped and tricked towards lucrative-looking but fraudulent ICO investment schemes.
This new ICO website is a multi-pronged approach by the regulatory agency towards protecting the investor’s interest, educating the public regarding the risks associated with ICOs and also initiating strict actions against the offenders. The website basically aims to counters the scams and securities fraud associated with digital currencies.
A statement from the SEC reads 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.”
Lori Schock, director of the SEC's Office of Investor Education and Advocacy, said: "At the end of the day, we're never going to be able to litigate our way out of investment fraud. It's going to come down to investor education.”
However, Jay Clayton - Chairman of the Securities and Exchange Commission said that agency is not against the adoption of new technology but wants to educate investors and other bodies and help them understand how scams and frauds look like.
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 has been since long combating these issue of fraud ICO schemes and has also dedicated a cyber unit to looks after such threats. However, these are usually corrective actions after the damage has been done and it is difficult for them to recover the investor money later on.
Hence educating investors to remain cautious before lending their money to fraudulent schemes looks to be the right approach SEC has adopted.