Crypto.com ads ruled "misleading" by ASA

When will ads for cryptocurrency be deemed misleading for consumers?

The key takeaway

Advertisers need to be wary of making misleading claims in ads for cryptocurrency investments, especially when it comes to financial performance and forecasted future earnings.

The background

In 2021, Forisgfs UK Ltd, trading as Crypto.com, placed ads on the Daily Mail app (Ad 1) and Love Balls mobile game (Ad 2). Crypto.com is a payment and cryptocurrency trading platform. Ad 1 included text inviting consumers to “Buy Bitcoin with credit card instantly”. Ad 2 included text stating “earn up to 3.5% [per annum]”. The number shown later increased to “8.5%”. 

The ASA challenged whether the ads were misleading in that they failed to represent the risk of investing in crypto, and whether they took advantage of consumers’ inexperience when it comes to crypto investment. Further, it considered whether Ad 1 failed to make clear that there were limitations if cryptocurrency is purchased on credit cards, and whether Ad 2 was misleading because the claims of earning “8.5%” could not be substantiated and were based on unclear earnings forecasts. 

Crypto.com argued that the ads did not actually advertise cryptocurrency, claiming that Ad 1 advertised only the speed with which users could buy Bitcoin, and Ad 2 promoting an offer to existing cryptocurrency users who would not be naive to the risks of investing.

The development

The ASA upheld its initial challenges, concluding that the ads breached the CAP Code because: 

• neither ad contained any warning about the risk to consumers of buying cryptocurrency, including the risk that the value of the currency could decrease as well as increase
• Ad 1 omitted material information related to the risks associated with purchasing using a credit card (such as cash interest rates and advance fees)
• Ad 2 was shown in an app that had a general audience that was unlikely to have any knowledge of cryptoassets, not just an audience who had previously purchased cryptocurrency as crypto.com claimed, and
• Ad 2 was worded in such a way as to potentially give consumers the impression that any deposit could give them the stated annual return rate, rather than that offer only being available to existing account holders.

The ASA also noted that the average consumer would not be aware that any profit made from investing in cryptocurrency might be subject to capital gains tax. Crypto.com had not, in its view, made any attempt to alert consumers to this fact. 

Additionally, the ASA noted that because cryptocurrency is unregulated and that the Ads’ audience would likely be people who would not generally be aware of this, the lack of any risk warning making consumers aware of the fact that there are inherent risks with unregulated currency, further resulted in the ads being misleading.

Crypto.com were instructed to never show the ads again in that form, and to ensure that any future ads made the risks of investing in cryptocurrencies clear, along with the risks of making a purchase with credit. 

Why is this important?

This ruling represents one of many from the ASA related to “misleading” cryptoasset ads. It is clear from this trend that the ASA is highly protective of consumers in relation to a largely unregulated and highly volatile market. It is worth noting that the ASA has now released guidance on how advertisers can avoid misleading consumers, and falling fowl of CAP's rules, when promoting products in this sector. 

This ruling also highlights that the protection of consumers from harm is at the heart of the ASA’s principles and situations whereby ads do not alert consumers to potential risks or do not consider the harm that could be caused will be difficult to defend. 

Any practical tips?

If you are planning to launch an ad that makes any claim about a cryptoasset, your first port of call should be the ASA’s new guidance. This outlines clearly what it will deem to be a breach of the CAP Rules, and how advertisers can avoid making false or misleading claims about the profit potential of cryptocurrencies.