The Securities and Exchange Commission (SEC) has launched an innovative idea to educate investors on the risks that come with initial coin offerings (ICOs). The ICOs market has been on the rise since the start of this year. However, this growth has also led to increase in cases of fraud, some of which have led to loss of millions of dollars in investors’ money.
Uncovering scammers’ tactics
In a move aimed at reducing cases of fraud, the SEC’s Office of Investor Education and Advocacy (OIEA) has announced the establishment of a mock initial coin offering (ICO) website to highlight on the potential risks of ICOs. The website will educate investors on the phishing tactics employed by fraudulent traders to steal from unsuspecting investors. The website will seek to popularize all “too good to be true” investment opportunities. SEC says that just like other markets, scammers are never far behind in trying to take advantage of digital currency schemes.
Structure of the website
The website, which is called HoweyCoin has been built with all the typical signs of a scam ICO. Additionally, the website has a whitepaper which has a lot of promises but have very little information about the products.
Additionally, the website is run by a team that has anonymous and untraceable identities both on social median and Google. To attract new customers, the website has unverified testimonials from celebrities and prominent people.
As part of its incentives, the website has exciting offers and discounts for the pre-sale just like many ICOs. However, as soon as one tries to purchase the tokens, the website directs them to investor.gov, and the party comes to an end.
According to Owen Donley, the Chief Counsel of the SEC’s Office of Investor Education and Advocacy, it takes a very short time to build a fraudulent ICO website. He adds that this shows the easy and fast to launch a scam website. It is very easy for fraudsters to build phishing websites, fill it up with convoluted jargon meant to lure investors into making phony deals. They end up being scammed unsuspectingly.