ICO scams
The change was announced in a blog post yesterday. Since the announcement, the value of Bitcoin has dropped as the cryptocurrency market experiences yet more pressure. After reaching all-time highs last year, the market has begun to dive downwards over the past couple of months.
Nonetheless, cryptocurrencies are continuing to gain attention. Some ICOs have raised hundreds of millions of dollars within a few hours. This has attracted attention from regulators including the U.S. Securities and Exchange Commission (SEC). It has moved to investigate firms using ICOs to raise funding after a string of alleged scams built around the technique.
Last week, an Ethereum startup disappeared from the Internet with the money it had raised from investors. In 2017, an individual advertising a cryptocurrency startup called PlexCoin allegedly scammed investors out of $15 million through a deceptive ICO. In the past few days, hackers have stolen over $530 million of cryptocurrency from the Japanese Coincheck exchange, highlighting the potential risks to users.
Deceptive ICOs “not in good faith”
Cryptocurrency proponents are trying to reach new consumers using ads on online platforms. In its post, Facebook said it’s taking action against ads that encourage people to make risky financial decisions to purchase Bitcoin. It cited examples of ads that ask the user to “use your retirement funds to buy Bitcoin” or purchase ICO tokens “at a 15% discount NOW.”
Facebook recognised that many cryptocurrencies and ICOs are legitimate. However, it said the recent spate of schemes using cryptocurrencies as the basis of scams has led it to take action against deceptive actors. It’s balancing the role of ads in educating users about new products with the potential risks of allowing misleading ones to remain online.
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“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception,” said Facebook. “That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith. This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices.”
Facebook’s policy bans all ads that promote financial products and services “associated with” misleading or deceptive activity. Initially, this covers binary options, cryptocurrencies and ICOs but the categories and exemptions will be reviewed over time. Facebook said it should make it harder for scammers to profit from its platform, keeping clickbait Bitcoin ads out of your news feed.
