Facebook is firing back against misleading and deceptive ad practices, and ICOs, cryptocurrencies and binary options are at the top of their list. In a blog post by Facebooks’ Rob Leathern, the social media giant is trumpeting a new policy, banning ads that “promote financial products and services that are frequently associated with misleading or deceptive promotional practices.”
Without a clear regulatory framework for ICOs, Facebook is just trying to protect its users — of which there were 2.7 billion as of Q2 2017 — and prevent bad actors from promoting their scams on the site. The policy is a broad-brush approach for the time being but seems to target sketchy ads making unrealistic claims and flying in the face of expert advice from blockchain veterans not to invest more than you can afford to lose in any digital coin.
They point to “many companies” that are advertising ICOs and cryptocurrencies, as well as binary options, that aren’t on the up-and-up.
“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve.” — Facebook
It’s unclear if Twitter or other social media sites will follow suit with similar ad guidelines.
Flurry of reasons
With a lack of clear regulation for upcoming ICOs, Facebook must have felt it had to do something. Meanwhile, they’re parroting some of the same concerns that blockchain veterans have similarly expressed.
Wences Casares, head of bitcoin wallet startup Xapo, recently reminded investors not to put more into ICOs than they can afford to lose, which supports Facebook’s ban of ads that urge people to redirect their retirement savings into token sales. Ethereum and Ripple founders have similarly been vocal about warning investors about possible scams circulating in the cryptocurrency industry.
Another ad that Facebook is targeting is the one that promises the absence of risk. That seems to have been the approach of Bitconnect, which was guaranteeing fixed returns and has since been hit with its second class action lawsuit claiming an investment scam.
Facebook’s advertising policy is notoriously fussy. The list of health foods and supplements it won’t list, for example, is extensive, and it also seems to have a problem with male torsos being displayed. ICOs and cryptocurrency projects – even those that are above board – can now be added to that list. There’s a school of thought that holds that ICOs which have merit shouldn’t require paid advertising in the first place, especially not display ads. If a product is genuinely innovative and worthy of investment, there are plenty of ways to create a buzz and form an active community without resorting to Facebook.
Facebook’s ICO and cryptocurrency ad ban come on the heels of a warning issued by SEC and CFTC chiefs Jay Clayton and Christopher Giancarlo, respectively, to the cryptocurrency industry. They admonished the industry participants who capitalize on the “limited” jurisdictional reach of the regulators, touting this as an attractive feature by which to invest in a digital coin. Meanwhile, the SEC has charged the decentralized AriseBank with fraud, stopping the company’s ICO right in its tracks.