The value of Bitcoin has plummeted following Facebook’s announcement they would ban adverts promoting cryptocurrencies.
Facebook’s new policy, which prohibits adverts relating to cryptocurrencies or initial coin offerings (ICO), has come into play because they are ‘frequently associated with misleading or deceptive promotional practices’.
The two billion strong social network has seen a steep rise in cryptocurrency-related ads as Bitcoin prices have skyrocketed.
Misleading ads have no place on Facebook: just launched a new policy to prohibit ads promoting financial products & services frequently associated with misleading/deceptive promotional practices, (e.g. binary options, initial coin offerings, or cryptocurrency) .. 1/2
— Rob Leathern ?⚙️ (@robleathern) January 30, 2018
Many of the adverts are feared to be scams and the Commodity Futures Trading Commission (CFTC) has summoned Bitfinex, a popular US website for buying and selling Bitcoin and Tether – a cryptocurrency linked to the dollar which is often used for buying Bitcoin, reports The Guardian.
Bitcoin’s price fell by more than 10pc to trade as low as $9,810 (£6,940), the lowest it’s been for two months.
On Tuesday night, Facebook said:
Misleading or deceptive ads have no place on Facebook.
We’ve created a new policy that prohibits ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.
There are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.
Despite Mark Zuckerberg’s recent support for cryptocurrencies, highlighting their potential benefits, Facebook is clamping down on their advertising.
At the beginning of the year, Zuckerberg said trends like cryptocurrency ‘take power from centralised systems and put it back into people’s hands’.
Bitcoin and other cryptocurrencies are facing growing scrutiny amid fears investors are putting money in without being aware of the risks and how the boom is being exploited by scammers.
Rob Leathern, a product management director at Facebook, said:
We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.
That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.
Some companies have used ICOs as a way to raise large sums of money but without the regulatory burden associated with raising cash though more traditional investment channels.
Because of this, many ICOs just disappear, with little recourse for the ‘investor’ since those who pay into ICOs do not typically get a genuine stake in the new company.
Facebook’s policy states:
Ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, or crypto-currency.
Advertising using phrases like ‘New ICO! Buy tokens at a 15% discount NOW’ or ‘Use your retirement funds to buy Bitcoin!’ will not be permitted.
This is Facebook’s most recent attempt to protect the integrity of the content shared on its platform.
Aside from the cryptocurrency adverts, Facebook has been clamping down on ‘fake news’ in the media and has been under fire for enabling Russian propaganda and other inappropriate content.