Hi Friends
Most of user are aware of the
Howey Coin ICO and its announcement
in the forum. Howey Coin is actually USSEC (United State Securities and Exchange Commission) initiative to educate the investor. Howey coin actually derived its name from a very famous case of
SEC_v._W._J._Howey_Co. which is also instrumental for creation of Howey test.
Now,If an ICO is selling its token USA/Worldwide, then it will be very interesting to check whether an ICO token classify as an security or not. You can use the following guideline to check whether the token is a security or not by using Howey test.
"
Under the Howey Test, a transaction is an investment contract if:
It is an investment of money
There is an expectation of profits from the investment
The investment of money is in a common enterprise
Any profit comes from the efforts of a promoter or third party "
You should not believe in ICO whether their token is security or utility and do the test yourself to find out in what exact domain it lies. SEC has already make itself very clear on the ICO offerings.
"
ICOs, or more specifically tokens, can be called a variety of names, but merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security."
So if an ICO token is already offered as security then you should check whether the ICO/company is listed in SEC. You can dircectly check the listing and research about company at below site:
https://www.sec.gov/edgar/searchedgar/companysearch.htmlIf ICO offering securities in USA does not feature in this list then it is indicator of red flag and keep yourself away from that ICO
Now, If ICO claiming itself other than security but falling under security by Howey test is also a red flag. How can you trust millions of dollars to an enterprise that is not able to understand such a simple concept?
I think if you pursue the ICO team on these question before investing then you will automatically filter out most of the scam ICO.
If business does not look legitimate then do not invest on it.Business is not legitimate then it will dupe you in the end.
If you find the company in the list, still check further what business company is doing because
impressio.io was listed in UK but it business was software consultancy not the lending one.
Now , if something does not fit on any of the above criteria( It does not fit US/Worldwide Security token) then you have list of guideline described below (you can use these guidelines to confirm your belief for the legit ICO too for confirming your belief too):
Guidelines, how to spot a scam ICO & report effectively.References:
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings :
https://www.sec.gov/ICO :
https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.
:
https://consumer.findlaw.com/securities-law/what-is-the-howey-test.html
