The U.S. Securities and Exchange Commission (SEC) has launched a fake initial coin offering (ICO) website in a bid to educate would-be investors on the risks scam ICOs pose.

In an announcement from the agency, the SEC has set up a website,, that copies a bogus coin offering designed to educate investors on the risks they should be aware of before investing their money into a possible scam.

The website has all the usual selling points that are designed to entice a would-be investor to hand over their money: ‘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,’ the announcement said.

Owen Donley, Chief Counsel of the SEC’s Office of Investor Education and Advocacy, who doubles as “Josh Hinze” on the HoweyCoins website, said:

“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.”

The SEC is currently pursuing a number of companies for more information as well as those who have allegedly pulled exit scams.

Jay Clayton, SEC Chair, said that ‘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,’ adding that:

“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.”

According to Patrick Byrne, the CEO of, ICOs should be rebanded as STOs, or Security Token Offerings, to provider greater clarity to regulators.

Earlier this month, he said:

“It’s the new term. The industry is distinguishing very clearly now between ICOs and STOs.”

Featured image from Shutterstock.
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