SEC Creates Fake Cryptocurrency To Help Educate Consumers About Crypto-Investing Scams
An amazing new cryptocurrency was announced yesterday that combines “the two most growth-oriented segments of the digital economy – blockchain technology and travel,” but, if you actually try to purchase HoweyCoins, however, all that you will receive will be a warning from the United States Securities and Exchange Commission about the dangers of investing in cryptocurrency Initial Coin Offerings (ICOs) without performing proper due diligence, and links to various other cryptocurrency-related educational materials.
The SEC created the HoweyCoins website (there is no real coin by that name) – that in many ways mimics the sites of new cryptocurrencies being launched with ICOs – explaining the ultimate intended usage of the coins, the benefits of purchasing tokens early, along with a countdown clock until the pre-ICO sale ends and the cost of tokens increases – to show how easy it is to set up an ICO scam, and to help educate people on the dangers of investing in ICOs without first obtaining and verifying adequate information.
I wonder, however, if the SEC’s efforts may turn out to be counterproductive. The Howie Coin site is “over-the-top” – almost parody-like – making so many exaggerated claims and promises (e.g., “HoweyCoins can serve as a GUARANTEED hedge against inflation and market loss”) that many people who might actually fall prey to real ICO scams (that rarely raise red flags as overtly as the HoweyCoin site does) might be able to quickly determine that HoweyCoin is bogus — potentially establishing within such folks a false sense of security. HoweyCoins’ celebrity endorsements also appear ridiculous when compared with many posts about questionable ICOs – combining absurd quotes and obvious stock images for promoters – and its team members’ bios do not check out as being those of real people.
The SEC’s approach reminds me of when many cybersecurity experts told people to look out for spelling and grammatical errors in phishing emails — an approach that worked well for a time, but conditioned folks to look for signals that criminals could easily change, and, ultimately, increased the danger of folks falling prey to scams when criminals wrote in perfect English, as they now so often do.
Of course, I understand the point that the SEC is trying to make – but, be careful: most ICO scams are nowhere near as obvious as one might think after seeing the HoweyCoins site.
If you are considering investing in cryptocurrencies it is critical to practice due diligence – there are many scammers out there, and some are more brazen than others. One important portion of your diligence should be checking out the team members – Google them, check their backgrounds, and verify that the folks listed on the ICO site are actually on the cryptocurrency’s team by checking their LinkedIn profiles, websites, etc. (I have personally been informed by multiple people that they have seen my name falsely listed as part of the team roster of a particular cryptocurrency with which I am not involved.)
And, of course, protect your cryptocurrency investments by securing your cryptocurrency. For tips on how to best do this, please see the article 18 Tips to Help You Secure Your Cryptocurrency.