The SEC made a faux cryptocurrency to point out you ways ICO scams work (News)


“We have lately seen fraudsters pretending to be concerned in blockchain know-how, preliminary coin choices and crypto-currencies — when actually they’re merely working scams designed to take traders’ hard-earned cash,” says the positioning. “We created the bogus website as an academic device to alert traders to potential fraud involving digital belongings like crypto-currencies and coin choices.” The company even put collectively a white paper about its faux coin.

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The positioning then goes on to explain a handful of purple flags that sign a rip-off together with claims of excessive, assured returns, superstar endorsements, claims of SEC compliance, means to take a position with a bank card and pump and dump schemes. Every of these parts have been included within the faux HoweyCoin website and the SEC makes use of them to elucidate why they need to alert potential traders. With regard to pumping and dumping, the SEC website says, “In a pump and dump scheme, fraudsters usually unfold false or deceptive info to create a shopping for frenzy that may ‘pump’ up the value of a inventory after which ‘dump’ shares of the inventory by promoting their very own shares on the inflated value. As soon as the fraudsters dump their shares and cease hyping the inventory, the inventory value usually falls and traders lose cash.”

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The SEC has been cracking down on cryptocurrencies and ICOs currently. It fashioned a Cyber Unit final yr and has introduced expenses in opposition to a variety of people internet hosting allegedly fraudulent ICOs. The company additionally stated it will be trying intently at corporations that instantly pivot to blockchain or cryptocurrencies.

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