In a blog post, Facebook released a new ad 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.”
This means that entrepreneurs will not be able to use Facebook's massive platform to promote new cryptocurrencies or initial coin offerings. The Menlo Park-based company said it intentionally kept the anti-crypto policy broad so it could fine-tune it later based on data gathered from reported violations. The policy is valid not only on Facebook’s platform but also on its ad network, which includes other sites such as Instagram and WhatsApp.
Initial coin offerings have become a popular method for raising money for new products and services. Several companies, new and established, have taken advantage of the structure and popularity of the format to raise money and market their services. (See also: Telegram to Launch Cryptocurrency: Joins Blockchain Bandwagon.)
But recent data suggests that ICOs have become a minefield for hackers and scammers. (See also: ICOs: Beginning Of The End?) Consulting firm Ernst & Young estimates that more than 10 percent of the $3.7 billion funds raised through ICOs are either stolen or hacked.
The cryptocurrency and ICO ecosystems have also become overheated due to extensive media coverage and publicity. Scammers have begun launching new coins to siphon money from gullible investors. In fact, the most recent example occurred just this week, when a journalist from Financial Times investigating a site which claimed to exchange cryptocurrency for actual goods was told that the service was actually "a penis."
In light of these developments, Facebook’s move to limit advertisements on its platform is not surprising. Government agencies have also begun cracking down on fraudulent offerings and cryptocurrencies.
There are no reported cases of ICO or cryptocurrency frauds being perpetrated on Facebook. That said, James Altucher, who has popped up on social media platforms advertising himself as a “crypto-genius,” may find the going tough under the new FB policy.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Site Edit or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Site Edit makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.