US SEC sets up own scam initial coin offering

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The deceiving website can be concluded to be the United States regulator's latest ploy to try to prove to investors that ICOs - in which firms offer digital tokens that can ultimately be exchanged for goods or services - are highly susceptible to fraud.

However, the ICO scene is full to the brim with exit scams, data breaches, and criminal schemes which can leave investors seriously out of pocket.

The SEC has done its part to combat ICO fraud. However, the U.S. agency is not content with dealing with fraudulent ICOs after the fact and instead hopes to educate investors to prevent such scams being successful in the first place. We've recently seen fraudsters pretending to be involved in blockchain technology, initial coin offerings, and crypto-currencies - when really they are simply operating scams created to take investors' hard-earned money. These include celebrity endorsements, promises of high returns, and ironically, promises that the ICO is SEC-compliant.

HoweyCoins says it combines the "blockchain and travel" to offer ICO participants massive discounts on travel expenses. Because of its finite supply and dedicated use in the travel industry it will be the coin of the realm for travel.

The page then continues to outline the red-flags the SEC planted on the HoweyCoins' site to demonstrate the false advertising practices that many scam projects employ to rope in investors.

In a white paper (.PDF), downloadable through the website, more indicators of a potential scam are present.

The website reveals that HoweyCoin is now in the middle of its ICO presale, giving investors just a little more than two weeks to purchase their tokens at a 15 percent discount.

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The website - called "HoweyCoins.com" - mirrors marketing materials published by actual cryptocurrency promoters.

Anyone that is somehow convinced enough to "buy coins now" on the site "will be led instead to investor education tools and tips from the SEC and other financial regulators".

By creating a scam ICO that seems literally too good to be true.

While many within the crypto world regularly express their discontent with regulatory bodies and see them as stifling the industry, this latest move from the SEC will no doubt serve as an important warning to would-be investors, and might at least raise a smile from the regulator's detractors.

The SEC said the HoweyCoins, name is a reference to the Howey test - the guideline everyone is applying to determine if an ICO is a security (even though they all are - in the US). The four-part test, established in 1946, ascertains whether or not a transaction is an investment contract or security.

If ICOs come under securities law, ICO traders must be vetted and offering companies and advisors need to have a strong, thorough knowledge of how to conduct securities events.

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