The SEC Trolled ‘Coin’ Scammers So Hard

May 16, 2018, 10:14 PM UTC
SEC Chairman Clayton And CFTC Chairman Giancarlo Testify On Virtual Currencies To Senate Banking Committee
Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), speaks during a Senate Banking, Housing and Urban Development Committee hearing in Washington, D.C. on Feb. 6, 2018.
Andrew Harrer—Bloomberg/Getty Images

Are you looking for a hot new investment? Well, hurry and sign up for HoweyCoins, an exciting opportunity that combines blockchain and luxury travel, and will deliver huge profits through an “Initial Coin Offering.”

The details of HoweyCoins are set out in a report on the website, and the project is being backed by a famous institution known as … the Securities and Exchange Commission.

That’s right. On Wednesday, the federal regulator raised eyebrows by putting out an unusual press release that urged investors to “Act Now!,” and publishing a mock website for HoweyCoins.

“HoweyCoins 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,” gushes the website.

Here’s a screenshot of an early promotion offer from HoweyCoins:

The SEC’s new website serves to warn investors about the perils of Initial Coin Offerings (ICOs), which invite people to buy digital tokens that, in theory, can be used in a future online service. But in reality, many token sales—which became wildly popular last year—are no more than wild speculation and, in some cases, outright scams.

Those who clicked on the “Buy Now” button on the HoweyCoins website were greeted with a warning:

The stunt is a masterpiece of trolling by the regulator, which takes aim at the pie-in-the-sky language used by many ICO promoters. The SEC also chose “Blockchain Week” in New York—when cryptocurrency and blockchain enthusiasts meet up for conferences and dinners—to advertise HoweyCoins.

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Even the name is a clever act of trolling: “Howey” is a reference to a famous Supreme Court case that sets out a test for determining if an investment product is a security that must be registered. In recent months, the SEC has made clear it thinks that new digital tokens—which promoters have tried to pass off as akin to subway tokens—are clearly securities.

The SEC’s HoweyCoins stunt went over well on Twitter where legal watchers praised the agency’s wit and ingenuity

In a press release, the SEC noted how easy it was to whip up the fake website.

‘The SEC was able to build the HoweyCoins website in-house in very little time, which demonstrates just how easy it is for someone to create a scam opportunity.”

In December, the SEC’s newly created cyber unit filed its first charges against ICO scammers, and is currently ramping up enforcement efforts.