British watchdog’s ruling that crypto exchange breached ad standards invites scrutiny of its Australian promotions
The AFL’s crypto exchange partner, Crypto.com, has breached UK advertising standards on multiple occasions and been accused of “misleading” and “irresponsible” behaviour.
The UK Advertising Standards Authority rulings may invite further scrutiny of Crypto.com promotions in Australia.
A five-year partnership between the AFL and the Singapore-based exchange was announced in January 2022. Since then, Crypto.com has been promoted around AFL stadiums.
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In December the ASA ruled that a local Crypto.com advertisement “failed to illustrate the risk of investing in non-fungible tokens”. It also found the ad did not make it clear that fees would apply.
In response, Crypto.com disputed the ruling and said the need to mention fees in the ad was not relevant and would “only confuse consumers”.
Earlier in 2022 the regulator upheld rulings on two other ads that were accused of exploiting the “inexperience or credulity” of consumers.
One said “buy bitcoin with credit card instantly”, which the regulator said “took advantage of consumers’ inexperience and credulity by not making clear tax could be paid on cryptocurrency profits and by irresponsibly encouraging investing in cryptocurrency on a credit card”.
Another told consumers they could “earn up to 8.5%”, which the ASA considered misleading “because the basis for calculating the earning forecast had not been made clear”.
Crypto.com told the regulator these adverts were deleted as soon as concerns were raised and that its oversight process had been strengthened.
It is not known whether any of these ads ran in the Australian market.
A Crypto.com spokesperson said the company was “trusted by more than 70 million customers worldwide and is the industry leader in regulatory compliance, security and privacy certifications”.
The Australian Securities and Investments Commission has called for a regulatory framework for cryptocurrency and crypto assets like NFTs in order to better protect consumers. While that is being developed, a spokesperson said rules around misleading and deceptive conduct still apply to any kind of crypto asset.
“Any firm that is misleading or deceptive in its advertising is breaking the law,” the Asic spokesperson said.
The regulator took BPS Financial to federal court in October over what Asic alleges is misleading and deceptive claims about the Qoin crypto asset, and Block Earner in November for allegedly offering financial products without an Australian financial services licence.
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The matters remain before the court. BPS is set to file its defence next month.
Dr Paul Mazzola, a cryptocurrency expert at the University of Wollongong, said the AFL partnerships with Crypto.com presented a reputational risk for the sporting code.
Mazzola said Asic could potentially take action if any similar advertisements were published in Australia.
“Ultimately Asic would need to make the case that the crypto asset being advertised clearly fits within the definitions provided under [Asic rules], which it probably does,” he said.
Mazzola recommended that the rules be changed to explicitly include cryptocurrencies and NFTs.
“This would clearly send a message to the market and especially crypto exchanges like Crypto.com that they need to be careful when framing their advertising and especially include all the warnings relating to the risks associated with investing in crypto markets.”
The AFL was contacted for comment but referred back to a previous statement in November when it said it stood by its partnership with Crypto.com after the collapse of FTX, one of the world’s largest cryptocurrency exchanges.
Crypto.com’s chief executive, Kris Marszalek, has rejected comparisons to FTX and said his company had a “tremendously strong balance sheet”.
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