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An SEC official can get a burger, fries, and a shake at the Shake Shack near the agency’s headquarters for about the same price the commission paid to launch a phony website intended to warn investors about initial coin offering scams.
The Securities and Exchange Commission had “less than $20” in out-of-pocket expenses for HoweyCoins, which the agency unveiled May 16, SEC Chairman Jay Clayton said June 14. The website uses fake celebrity endorsements, discount specials, and a nine-page white paper to encourage investors to buy digital tokens through an ICO funding a travel-related venture and bringing what it claims are “excitement and guaranteed returns.” Clicking “Buy Coins Now!” brings website visitors to an Investor.gov webpage that details ICO fraud red flags.
“While fraud is very costly, it can be cheap to engineer,” Clayton said in remarks prepared for an agency Investor Advisory Committee meeting in Atlanta.
The SEC created HoweyCoins in-house and “very quickly,” Clayton said. The website emerged after the chairman and other SEC officials repeatedly cautioned investors — and firms launching or assisting ICOs — about the fundraising tools. Clayton has said most of the ICOs he has seen involve the offering and selling of securities, requiring them to follow securities law.
The commission has brought several ICO-related cases since September 2017, according to Bloomberg Law’s ICO Developments Tracker. Most recently, the SEC sued a self-proclaimed “blockchain evangelist” and his businesses over an ICO the agency said fraudulently raised money for a purported information technology platform. The ICO raked in up to $21 million from investors, according to the SEC.
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