SEC Launches Mock Website to Highlight ICO Risks

The Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) is out with a new idea to ‎highlight the risks of the booming ICOs market, which has grown rapidly with ‎estimates topping $4 billion in token sales in 2017 alone. ‎

The SEC’s Office of Investor Education and Advocacy (OIEA) has created a bogus ‎Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco Read this Term) website that advertises a ‘too good to be’ true ‎investment opportunity. The regulator said it wants to explain that as with ‎many other hyped markets, scammers are never far behind in trying ‎to take advantage of cryptocurrency-based schemes.‎

The fictitious‏ ‏site, HoweyCoins.com, shows many sales tactics in which an ‎investor is attracted by fraudulent ICO advertisements. Thus it educates potential investors about what to look for before they invest in a ‎scam. The website offers education tools from the SEC and other ‎regulators using creative ways, such as showing tips ‎when the user clicks on “Buy ‎Coins Now” buttons.‎

The SEC added that most ICO providers fail to disclose the value of their projects, making it hard ‎for investors to distinguish between legitimate and fraudulent intentions. As such, the launch of its ‎mock site aims to detail the risks that ICOs present to investors, claiming they ‎provide the ideal environment for scammers.‎

The SEC recently issued multiple trading suspensions and halted several ‎token sales. Earlier in January, the agency halted a fast-moving initial coin ‎offering (ICO) that was seeking to raise up to $1 billion from thousands of ‎investors ‎to develop “‎the world’s first decentralized cryptocurrency bank.”‎

SEC Chairman Jay Clayton commented: “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.”‎

Owen Donley, Chief Counsel of the SEC’s OIEA office, added: “Fraudsters can quickly build an attractive website and load it up with ‎convoluted jargon to lure investors into phony deals. But fraudulent sites also often have ‎red flags that can be dead giveaways if you know what to look for.”‎