New Study: 20% of ICOs Are Scams, But Investors Aren’t Fazed

Initial Coin Offerings (ICOs) have become the hottest way of raising capital, but at least one in five has turned out to be a scam, according to a new study. 1 in 5 ICO Projects are Scams The number of Initial Coin Offerings (ICOs) has gone through the roof throughout the last year as their underpinned technology, the blockchain, received mass media exposure and starts to see widespread adoption. Yet, being comparatively easy means of

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Ethereum Foundation Advisor: SEC Lacks Fundamental Understanding of Core Nature of Crypto

William Mougayar, advisor to the Ethereum Foundation, claims that the SEC is “trying to fit a square peg into a round hole” regarding crypto regulation.

William Mougayar, author of “The Business Blockchain” and advisor to the Ethereum Foundation, said in an interview with CNBC May 18, that regulators lack a foundational understanding of cryptocurrencies.

Speaking to CNBC, Mougayar explained that in an attempt to regulate digital currencies, the US Securities and Exchange Commission (SEC) lacks an understanding of the core nature of the industry, trying to apply a one-size-fits-all approach:

“The SEC is still trying to educate themselves, not just educate the public … Right now they are still grappling with it and for them the box that they play in is that they see all these cryptocurrencies as a security. But in reality not everything is a security. They want everything to play in that box.”

Answering a question about whether the SEC wants to keep digital currency classified as a security, specifically so they can regulate it, Mougayar responded:

“Exactly. That’s their box, the box they play in. They see everything as a security and they are trying to fit a square peg into a round hole, but not everything is a security right now.”

Regarding Twitter CEO Jack Dorsey’s recent statement that Bitcoin (BTC) will be the native currency of the Internet, Mougayar said that he considers BTC one of the native currencies, but “it’s not going to be the only one, there will be others.”

Mougayar stated that Ethereum (ETH) will “definitely” overtake BTC because it has the “largest ecosystem of developers and start-ups, and venture capital, and all kinds of support going around it.” He said:

“What’s important is not just the technology itself – it’s who is using it.”

Mougayar further explained that currently, cryptocurrencies are underused in their capacity as utilities with real use cases, where they would serve a real purpose and not merely be speculatory instruments. He pointed out that 53 percent of Ethereum transactions are on smart contracts. According to Mougayar this shows that it is “not just as a currency, [but] a utility.”

Recently, the Office of Investor Education and Advocacy at the SEC launched a fake initial coin offering (ICO) website, the goal of which is to increase awareness of the typical warning signs of scam ICOs and to promote investor education. According to the SEC Chairman Jay Clayton, the regulator supports the adoption of new technologies, but it also encourages investors to educate themselves and understand what fraudulent offers look like.

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US Securities and Exchange Commission Launches ‘HoweyCoins’ ICO

In a surprising turn of events, the US Securities and Exchange Commission has launched its own initial coin offering dubbed HoweyCoins. ‘A Hot Investment Opportunity’ Anyone looking for a hot new initial coin offering (ICO) should look no further than the US Securities and Exchange Commission’s brand new token sale for HoweyCoins. States the regulatory authority in an official press release: If you’ve ever been tempted to buy into a hot investment opportunity linked with

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SEC Launches Mock ICO to Show Investors Warning Signs of Fraud

The SEC Office of Investor Education and Advocacy launched a fake ICO website to illustrate common warning signs of a scam.

Office of Investor Education and Advocacy at the US Securities and Exchange Commission (SEC) has launched a fake initial coin offering (ICO) website,  according to a press release May 16. The goal of the site is to increase awareness of the typical warning signs of scam ICOs and to promote investor education.

The mock website HoweyCoins.com represents a classic example of a fraud ICO website that touts an “all too good to be true investment opportunity.” The website includes such details as a misleading and blurry white paper, guaranteed returns claims, celebrity endorsements, and a countdown clock that is “quickly running out on the deal of a lifetime.”

When a user clicks on “Buy Coins Now,” they are lead to the website Investor.gov, which was established by the SEC to help investors avoid fraud. The site warns that if users would have responded to an investment offer like HoweyCoins, they “could have been scammed.”

ICO - HOWEYCOINS

SEC Chairman Jay Clayton emphasized that the agency supports the adoption of new technologies, but it also encourages investors to educate themselves and understand what fraudulent offers look like:

“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. I encourage investors to do their diligence and ask questions.”

Owen Donley, Chief Counsel of the SEC’s Office of Investor Education and Advocacy, noted that a fraudulent ICO website can be set up in a very little time, which illustrates how easy and fast it can be to launch another scam offer. “Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals,” Donley said.

Earlier this week, Cointelegraph reported that three co-founders of cryptocurrency startup Centra Tech have been formally indicted for running a fraudulent ICO. Centra Tech’s ICO raised $32 mln from investors in 2017. The Florida-based founders misled investors by claiming that they had partnered with Visa and Mastercard to issue virtual currency debit cards.

Late last month, SEC Commissioner Robert Jackson expressed criticism of ICOs in general, claiming that investors “are having a hard time telling the difference between investments and fraud.” He further stated that the ICO market is a prime example of what an unregulated securities market would look like.

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US Prosecutors Indict Three Co-Founders Of Floyd Mayweather-Backed ICO For Fraud

A US District Court in Manhattan has issued a formal indictment of the three founders of Floyd Mayweather-backed Centra Tech ICO for securities fraud, among other charges.

The three co-founders of cryptocurrency startup Centra Tech have been formally indicted for running fraudulent ICO, according to a statement May 14 from the U.S. Department of Justice.

According to the four-count indictment issued by the U.S. District Court in Manhattan, all three Centra Tech co-founders Sohrab Sharma, Robert Farkas, and Raymond Trapani are being charged with securities fraud, wire fraud and two conspiracy counts.

Centra Tech’s Initial Coin Offering (ICO) raised $32 mln from investors in 2017. The Florida-based defendants had misled investors by falsely claiming that their company had partnered with Visa  MasterCard to issue virtual currency debit cards.

Centra Tech was previously promoted by celebrities Floyd Mayweather and DJ Khaled.

Late last month, US Securities and Exchange Commission (SEC) Commissioner Robert Jackson expressed criticism of ICOs in general, claiming that investors “are having a hard time telling the difference between investments and fraud.”

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Coinbase Targets ‘$10 Bln’ Institutional Investor Market With New Suite Of Products

Major US crypto wallet and exchange service Coinbase has announced it is launching a series of new products aimed at drawing in major institutional capital.

Major US crypto wallet provider and exchange service Coinbase has announced it is launching a suite of new products aimed at institutional investors, according to an official blog post today, May 15.

The four products – Coinbase Custody, Coinbase Markets, The Coinbase Institutional Coverage Group and Coinbase Prime – all focus on alleviating major concerns that have allegedly caused institutional investors to hold back from entering the cryptocurrency space so far, such as security and regulatory compliance.

Adam White, Coinbase vice president and general manager, was confident in telling CNBC that:

“We think this can unlock $10 billion of institutional investor money sitting on the sideline. We’re seeing a rapid increase in attention awareness and adoption in the cryptocurrency market.”

Coinbase Custody, first announced last year in an official Coinbase blog post, addresses the “number one” concern of institutional investors, namely, security. The company explains that the  custody solution for digital assets will secure clients’ funds through rigorous financial controls such as multi signatory protection, audit trails, and withdrawal limits.

Although the company reportedly already stores over $20 bln worth of clients’ crypto, according to CNBC, Coinbase Custody will be established in partnership with a third party auditor, reported to be an SEC-compliant independent broker-dealer.

Coinbase Markets, meanwhile, will be a Chicago-run electronic marketplace that provides a centralized pool of liquidity for all investors, and aims to offer settlement and clearing services in future, according to Coinbase’s announcement today. In addition, Coinbase Prime will be an separate trading platform for institutional clients.

Coinbase currently has over 20 mln customers and has already traded $150 bln in digital assets on its crypto exchange platform, according to CNBC. In 2017, it reported $1 bln in revenue, according to figures from Recode, with $225 million in VC funding from investors such as Andreessen Horowitz, Union Square Ventures and the New York Stock Exchange. It reportedly valued itself at around $8 bln in an acquisition deal this spring.

This month, New York Stock Exchange owner ICE announced its own plans to settle crypto swap contracts in BTC, suggesting it too has come up with an SEC-compliant custody solution for institutional holders. ICE’s announcement came just days after investment banking giant Goldman Sachs said it would be opening a crypto trading desk “within weeks.” With custody and regulatory obstacles seemingly out of the way, many have predicted that a “mature” crypto market will indeed inevitably draw major institutional investment into the space.

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