Topic: Fake ICOs (Read 105 times)

Welcome to Investor.gov, the Securities and Exchange Commission’s site designed for individual investors. We’ve recently seen fraudsters pretending to be involved in blockchain technology, initial coin offerings, and crypto-currencies – when really they are simply operating scams designed to take investors’ hard-earned money. We created the bogus HoweyCoins.com site as an educational tool to alert investors to possible fraud involving digital assets like crypto-currencies and coin offerings.

Fortunately, frauds like these often have a number of “red flags” that can help you tell if the so-called “investment opportunity” is really a scam. Our bogus site is a mash-up of a number of different things we've seen – any particular fraud may be harder to spot than the red flags here. Here are some of the signs of fraud that are on the HoweyCoins site – we hope reviewing these may help you recognize a real fraud in the future!

Every investment carries some degree of risk, which is reflected in the rate of return you can expect to receive. High returns entail high risks, possibly including a total loss on the investments. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.”

Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services – sometimes including crypto-currencies and coin offerings. A celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors. It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.

The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as "exchanges," which can give the mis-impression to investors that they are regulated or meet the regulatory standards of a national securities exchange. Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select.

Investors should understand that most licensed and registered investment firms do not allow their customers to use credit cards to buy investments or to fund an investment account. We urge investors to work only with a licensed or registered investment professional or firm and not attempt to use a credit card to fund investments.

In a pump and dump scheme, fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls and investors lose money.