Social media has a great importance today, and so cutting ads regarding crypto start-ups, and ICO issuers is a thing to worry for all regulators. Facebook has announced that advertisements regarding all financial products including bitcoin and ICO’s are banned.
According to Facebook, these ads are misleading people and so are required to be banned. Stakeholders are facing a big problem due to such harsh step of Facebook. Stakeholders are still able to survive as regulators of Facebook are supervising ads of the company. Johanna R. Collins-Wood who is an associate at Pepper Hamilton and also one of the members of block chain group has declared it as the positive sign for crypto entrepreneurs.
Many people who are supporting such ads have raised their support for not taking such ads as susceptive. According to them, ads are viral when it is about to seek attention and provide required information to ordinary people. Entrepreneurs and ICO issuers are informing knowledge of claims through marketing.
According to Securities and Exchange Commission, Commodity Futures Trading Commission who are members of Senate will check if ads are real or fraud. Senate members have made it clear that if they file a case against a company, they will thoroughly examine everything—including its social media advertisements—to determine the company’s actual position.
France’s stock market regulator, L’Autorité des Marchés Financiers (AMF), announced that it will take cryptocurrency-related advertisements seriously and address them with appropriate action. The AMF also stated that it will factor in such advertisements while reviewing cases involving the crypto industry.
Complaints against misleading crypto ads
Financial regulators have not established clear criteria for determining when advertisements qualify as fraudulent. Security lawyer Carl Johnston explained that multiple factors come into play when labeling an ad as misleading or deceptive. He noted that some of these factors are blatantly obvious and, therefore, such ads should not appear in the media.
Last year, someone stole a logo and used it in a Facebook advertisement. New Zealand newspaper has reported about it and according to Former Prime Minister he has investigated in bitcoin which was fake. It is just not in New Zealand as Continents’ securities in Australia have reported nearly 1200 such scams. Hackers breached the Japanese exchange Coincheck, stealing $533 million, while the company simultaneously ran a television ad campaign.
Industry observers noted that companies are spending more on advertising than on platforms like Coincheck. SBI Holdings CEO criticized such companies, calling them ‘scum’ for their misleading practices. Regulators are actively working to clarify advertising guidelines. Johnston emphasized the need for specific laws to prevent companies from displaying deceptive ads.
Federal Trade Commission is silent on allegations
The Federal Trade Commission, a U.S. government agency, actively investigates such complaints across the country. According to Johnston, he does not have much idea about such agency, but he follows everything about ICO’s and added that he had not seen FTC’s name lot. As said by New Zealand’s Advertising Authority there are no complaints regarding the crypto ads.
UK’s authority has received less than ten such complaints which have misleading ads regarding cryptocurrency and investigation on it does not come with any results. UK’s spokesperson has pointed to FCA as they are in charge of commercial advertisements which was denied by FCA. According to Collins-wood clients who are in need of such ads must follow securities law as it will eliminate all nasty issues regarding advertisements on social media.
Facebook ban on ICO ads: How start-ups are affected
Russia’s VK, often compared to Facebook, initially supported the restriction of crypto advertisements last year. However, reports from August 2017 indicated that VK lifted the ban to create more opportunities for the cryptocurrency market to expand. Millions of users on social media actively follow developments in the crypto space. Still, VK has clarified that it will reject any ads that violate platform rules, as it does not endorse misleading promotions.
A Twitter spokesperson has not passed a single comment on an advertisement of cryptocurrency as no other social media is against it. Google has its own specific rules and regulations which will accept crypt ads according to it. Ecosystem might have minimal impact on social media platforms.
CEO of bit Flyer, Midori Kanemitsu who runs ad campaign of both social media and TV has said that ban on such ads on Facebook have less impact. According to him, TV ad campaign has more effect on people, and so he is very cautious with an advertisement on TV. He said that they are not in support of advertising ow risk or substantial returns type of ads. They carry out internal regulatory procedures to avoid misleading ads as they do not have rights for legal restrictions.
