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The United Kingdom’s Advertising Standards Authority (ASA) has flagged Crypto.com’s advertisements relating to non-fungible tokens (NFTs) for being misleading to investors and failing to identify the risks associated with the asset class.
The erring advertisements were paid ads on Facebook involving the promotion of the NFT project Turtle United seen in July 2022. The ASA challenged the advertisement on three major grounds, saying that it failed to “illustrate the risk of NFT investment,” did not disclose minting, and gave unverifiable assurances to investors.
“Because the ad did not include any risk warning making consumers aware that the value of NFTs could go down as well as up, or that they were an unregulated crypto asset, we concluded that the ad was misleading,” said the ASA.
Crypto.com defended itself by submitting that the advert is no longer visible on its platform and reasonably believed it did not violate any of ASA’s rules. The digital asset exchange argued that since NFTs were not mentioned in the Treasury’s reports on digital assets, it assumed they were not financial products.
Despite Crypto.com’s defense, the ASA upheld the complaint on the grounds that NFTs can operate as an investment because of the description of the digital collectible as “offering a lot of value.” It added that the ad breached the Free Principle rule as it omitted that investors must pay a minting fee of 0.2 ETH, the equivalent of £250 ($302).
In its final ruling, the ASA warned that the advert could only appear in its current form again if the suggested changes have been implemented. The ruling of the ASA has been described as being lenient compared to previous penalties issued against virtual currency advertisers, including the use of fines.
Not the first time for Crypto.com
This is not the first time Crypto.com has had a run-in with the ASA, as back in January, the exchange had two adverts flagged by the regulator. The first ad was published on the Daily Mail app, with the text “Buy bitcoin with credit card instantly,” while the second purported to imply that investors could earn up to 8.5% per annum.
At that time, no fines were issued, but ASA ordered the pulling down of the ad and warned that all advertisements must disclose the risks associated with virtual currencies. Crypto.com agreed with ASA’s submission, noting that it would go the extra mile to ensure that it did not violate the rules.
“We appreciate the collaborative dialogue and engagement from the ASA regarding advertising in the U.K. in this relatively new industry and remain committed to working with them and regulators around the world to ensure all of our activities are compliant with the most recent regulatory guidelines,” said Crypto.com’s spokesperson.
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