The ICO market has experienced phenomenal growth in the last 15 months. ICOs have opened up significant opportunities for startups by providing them with a simple way of raising funds compared to traditional venture capital. They offer a fast, low-cost option that does not require intermediaries. According to coinschedule.com, close to $5Billion has been raised in 2018.
Due to its decentralized and open nature, the cryptocurrency world offers minimal protection to the players. Consequently, scammers and con artists have invaded the ICO market by introducing fake ICOs, wallet scams, email scams, and fake exchanges. Social media networks have a high number of users, making them natural grounds for the perpetuation of these frauds.
A prime example is the Blocksims ICO – Blocksims stole the business model, and database content from a legitimate ICO, and have tried to pass it off as their own. People who invest in Blocksims ICO will soon find out they have been swindled. There has been an aggressive effort to expose this fraud, but some people who don’t research and do their due diligence, will lose their money.
In the last 3 months, social media giants Facebook, Twitter, and Google have banned ads in their networks. Facebook set the pace on 30th January, 2018 when it updated its advertising policy to prohibit misleading or deceptive promotional practices. Cryptocurrency-related ads fell in this category and the company initiated a total ban on them.
The company explained that the ban was instituted with the aim of protecting the platform users from financial products which are not offered in good faith and to make it harder for scammers to profit from a presence in the social media network.
Furthermore, the blog post which announced the news indicated that the ban was intentionally broad and would be reviewed over time should the operating environment improve. In fact, in an interview with the CNN, Mark Zuckerberg, the Facebook co-founder, suggested that there was a need for some level of ads transparency regulation on the internet similar to what is applicable in TV or print advertisements.
Hot on the heels of the Facebook ban, Google announced, in a March 2018 post, a similar ban on its platform starting June 2018. The company has updated its financial services policy to exclude advertisements for cryptocurrencies and related content including ICOs, cryptocurrency exchanges, wallets, and trading advices. The change in policy impacts all Google Ads products meaning that cryptocurrency-related ads will not be available both on the search engine’s own websites and third-party sites in its network.
Scott Spencer, the Director of Sustainable Ads at Google told CNBC that the new restrictions on cryptocurrency Ads were necessary since they had observed significant loss or potentialloss to consumers and required to approach the sector with extreme caution. The implication ofthis ban is that genuine cryptocurrency wallet providers and promising ICOs only about two months to access the world’s most popular search engine.
As if the bans by Facebook and Google were not bad enough, Twitter has joined in to complicate matters for the cryptocurrency dealers and ICOs offers. The policy, to be introduced over the month of April, will ban the advertising for Initial Coin Offerings and token sales. In addition, the Twitter ban will also include a ban on cryptocurrency wallets and exchanges, unless they are public companies which are listed in major stock exchanges. Just like its counterparts, Twitter cited the safety of users as the primary motivation behind the ban.
Coming after the bans by Facebook and Google, the ban by Twitter was not completely unexpected. In many occasions, Twitter has been used to impersonate popular cryptocurrency advocators and developers leading to huge losses by unsuspecting users. Furthermore, there have been incidences where Twitter accounts of popular industry personalities have been hacked and used to promote some nondescript tokens. That was the case with John McAfee’s twitter account.
Despite the bans, one common thing about these social media companies is that they have themselves, in one way or another, invested – or have some interests- in the cryptocurrencies and the underlying blockchain technology. Two weeks before the ban by Facebook, Zuckerberg in a detailed post focused on the potential benefits that cryptocurrencies have for companies like Facebook. He went on to explain how ready he was to study the benefits of these emergingtechnologies and apply their benefits to improve his company’s offerings.
On its part, Google has made substantial investments in companies which directly use cryptocurrencies. These include Blockchain-based cloud storage Storj, payment platform Veem, and London-based online wallet Blockchain.info.
As for Twitter, its CEO, Jack Dorsey, is a staunch advocate cryptocurrencies having personally invested in Bitcoin, is a CEO of a point-of-sale software startup which plans to incorporate Bitcoin buy/sell features, and has invested in Lighting Labs.
In the absence effective regulations on cryptocurrencies and ICOs, this latest trend of their restricted promotion on social media platforms is likely to continue. With the increasing number of ICOs coming to market, it is an impracticable task to differentiate genuine from frauds. Although such restrictive measures in Ads control are restrictive and hurts the genuine players in the cryptocurrency world, the impact of fraudulent activities is great. The platforms are seeking to produce a safer environment free of potential scams like Blocksims ICO