In an effort to resist cryptocurrency scams, the U.S Securities and Exchange Commission (S.E.C) has created a scam ICO website as an example to warn the crypto community. It was well-received and widespread within the crypto community.
Jay Clayton - the SEC Chairman - has explained: “The rapid growth of the ‘ICO’ market, and its widespread promotion as a new investment opportunity, has provided fertile ground for bad actors to take advantage of our Main Street investors. 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.”
As the testimonials section of http://www.howeycoins.com, which is the created website by S.E.C, they even put on anticipation for return of investment that reaches over 1% daily. The ICO has been introduced with a whitepaper without any explanation for implemented technical methods. It only describes how big the travel industry is and persuades investors to join the ICO. This is similar to most scam ICOs out there in the market.
In addition, SEC Chief Counsel, Owen Donley, detailed how fraudsters “can quickly build an attractive website and load it up with convoluted jargon to lure investors into a phony deal. But fraudulent sites also often have red flags that can be dead giveaways if you know what to look for.”
By clicking on the live links, users will be brought to a landing page: “If You Responded To An Investment Offer Like This, You Could Have Been Scammed – Howeycoins Are Completely Fake!” the banner blares. “Fortunately, frauds like these often have a number of ‘red flags’ that can help you tell if the so-called ‘investment opportunity’ is really a scam. Our bogus site is a mash-up of a number of different things we’ve seen – any particular fraud may be harder to spot than the red flags here. Here are some of the signs of fraud that are on the Howeycoins site – we hope reviewing these may help you recognize a real fraud in the future!”
It is true that scams have increased rapidly within the cryptocurrency industry. However, no one can deny the advantages of cryptocurrency. This is an innovative form of technology that will bring our society to the next level. There are risks that involve in any type of investments. Therefore, it depends on investors to avoid scams.