European Authorities Investigate Social Media Platforms Over Misleading Crypto Ads
In a significant move, the European consumer group BEUC has lodged a complaint with the European Commission, alleging that popular social media platforms – Meta Platforms’ Instagram, Alphabet’s YouTube, TikTok, and Elon Musk’s Twitter – are facilitating misleading promotions related to crypto assets.
Protecting Consumers Against Misleading Crypto Ads
The BEUC has emphasized that deceptive advertising on social media constitutes an unfair commercial practice, posing significant risks to consumers, including potential financial losses. The complaint specifically targets both paid advertisements and influencer endorsements prevalent within the crypto industry.
The Web3 space, following the collapse of Sam Bankman-Fried’s FTX exchange last November, has come under increased regulatory scrutiny. Global regulators have been keeping a close watch on market participants, with actions against major platforms like the US’s Coinbase and Changpeng Zhao’s Binance.
The BEUC’s complaint now targets social media giants Instagram, YouTube, TikTok, and Twitter, accusing them of enabling the spread of misleading crypto advertisements.
A Joint Effort
BEUC, along with nine of its members, is urging the European consumer authorities and the European Supervisory Authorities for financial services to ensure these platforms modify their advertising policies. This move aims to prevent consumers from falling prey to scams and false promises in the crypto world.
BEUC director general, Monique Goyens, stressed the need for immediate action, stating, “Crypto will be regulated soon with the new Market in Crypto Assets Regulation, but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers.”
The BEUC’s action has garnered support from consumer groups across Europe. With collective efforts, the group aims to hold these social media platforms accountable for their role in deceptive crypto advertising.
Although the European Union has taken significant steps towards regulating crypto assets with the Market in Crypto Assets (MiCA) regulation, these rules do not directly address the responsibilities of social media companies in preventing misleading promotions related to crypto assets.
BEUC is keen to monitor the effectiveness of the stricter ad policies it advocates and will communicate the results to the European Commission. This collective effort is a crucial step towards highlighting the potential risks associated with misleading advertising in the crypto space. Through stricter ad policies and holding social media platforms accountable, BEUC and its partners aim to create a safer environment for consumers venturing into the volatile world of crypto.