SAN FRANCISCO/NEW YORK – Facebook Inc. is banning ads on its social network that promote cryptocurrencies, initial coin offerings and binary options, saying they’re “frequently associated with misleading or deceptive promotional practices.”
The announcement came after about ¥58 billion ($532 million) in cryptocurrency was stolen from Tokyo-based virtual currency exchange Coincheck Inc. in a hacking incident last week. The value of the stolen assets have fluctuated since then, as ¥46.3 billion was reimbursed to all 260,000 customers who lost money in the theft.
The policy will be “intentionally broad” while Facebook works to understand which ads are deceptive or misleading, from companies “not currently operating in good faith,” the company said Tuesday in a blog post. Facebook, along with its other properties including Instagram, won’t allow ads that say “Use your retirement funds to buy Bitcoin!” for example, or those that promote binary options trading, a risky derivative with an all-or-nothing payoff.
“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception,” Facebook said.
There have been a number of instances where people or companies have raised money through an ICO, or initial coin offering, with no apparent business behind it. Regulators have recently started to crack down. The U.S. Securities and Exchange Commission said this week that it got a court order freezing the assets of an alleged initial coin offering scam by AriseBank.
Still, enthusiasm for bitcoin and other volatile digital currencies has minted many millionaires. Public companies have capitalized on the hype, with everything from packaged-food makers to sports-bra manufacturers seeing shares surge after linking their firms to crypto, sometimes just by name.
Earlier this month, Facebook CEO Mark Zuckerberg referred to cryptocurrencies and other technologies that decentralize power as a trend he was studying in 2018, part of an effort to correct problems on the social network. While some enthusiasts took this as a positive sign for digital currencies, Zuckerberg wrote at the time that he was looking at both the positive and negative aspects of the technology.
Bitcoin has a history of big run-ups in price followed by steep declines. In 2017, it surged more than 1,700 percent, and almost touched $20,000. Today it trades around $10,000.