A new website has all the hallmarks of an Initial Coin Offering scam, but in reality, the Securities and Exchange Commission (SEC) has set it up to show potential ICO investors how to spot a scam.
Howeycoins.com seems like yet another ICO set to go live in approximately two weeks.
It attempts to leverage digital currency and the travel industry. It notes in its white paper: “However, one area that has not reaped all the efficiency gains and reduced costs from the Internet is the travel industry. Yes, you can find hotel rooms and airfares more easily than before with the proliferation of comparison travel websites but the travel industry is still underpinned by a legacy cost structure that supports itself at your expense. From currency translation fees, credit card fees, service surcharges to the inherent costs of fiat money, the travel industry is rife with transaction inefficiencies that end up costing you money. Travel is expensive, but we are at the cusp of a revolution that will democratize travel and leisure for everyone. The Internet was the first part of the revolution. The other part is blockchain technology and cryptocurrencies.
The ICO further notes on its site, “Combining the two most growth-oriented segments of the digital economy – blockchain technology and travel, HoweyCoin is the newest and only coin offering that captures the magic of coin trading profits AND the excitement and guaranteed returns of the travel industry. HoweyCoins will partner with all segments of the travel industry (air, hotel, car rental, and luxury segments), earning coins you can trade for profit instead of points.”
According to the site, Josh Hinze is the Co-Founder and Head Architect; Ashley Turnbull is the Co-Founder and Head Travel Specialist, and Emma Kim is the Head of Partner Development.
They are three of six principles listed on the site.
- HoweyCoins touts upsides like:
- HoweyCoins are officially registered with the U.S. government;
- HoweyCoins will trade on an SEC-compliant exchange where you can buy and sell them for profit;
- HoweyCoins can be used with existing points programs;
- HoweyCoins can be exchanged for cryptocurrencies and cash;
- HoweyCoins can be spent at any participating airline or hotel;
- HoweyCoins can also be redeemed for merchandise.
But HoweyCoins is not a new ICO; it is a site which the SEC created to help potential crypto-currency investors spot scams.
“The SEC set up a website, HoweyCoins.com, that mimics a bogus coin offering to educate investors about what to look for before they invest in a scam. Anyone who clicks on “Buy Coins Now” will be led instead to investor education tools and tips from the SEC and other financial regulators.” The SEC said in a statement.
“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,”said SEC Chairman Jay Clayton. “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.”
The SEC further noted: “The website features several of the enticements that are common to fraudulent offerings, including a white paper with a complex yet vague explanation of the investment opportunity, promises of guaranteed returns, and a countdown clock that shows time is quickly running out on the deal of a lifetime.”
“Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals,” said Owen Donley, Chief Counsel of the SEC’s Office of Investor Education and Advocacy, whose photo was used for “Josh Hinze” on the HoweyCoins website. “But fraudulent sites also often have red flags that can be dead giveaways if you know what to look for.”