FTC Investigates Crypto Firms Over Deceptive Ads
- In June, the FTC released a report stating that most crypto scams took place on social media.
- The regulator also claimed that more than $1 billion had been lost to crypto scams in 2022 alone.
- Regulators in the UK and Australia have also issued warnings to crypto firms over their ad policies.
The US Federal Trade Commission (FTC) is set to investigate crypto firms over possible misleading crypto advertisements. As per a Bloomberg report, Juliana Gruenwald, a spokeswoman for the watchdog, confirmed that the regulator had begun a probe into the misconduct of several crypto firms. The FTC is an independent organization established to safeguard the general public against dishonest or unfair corporate practices.
While Gruenwald offered no clarity on which crypto firms were being probed or why the regulator began an investigation at first, crypto-based ads have gained widespread attention in the United States. Crypto projects frequently hired prominent Americans to represent them. Platforms like FTX used these tactics successfully during their heyday.
However, the crypto market is far from the success it enjoyed in 2021 during the bull run. Unfortunately, a couple of top crypto projects have filed for bankruptcy, while others have been outright fraudulent. As a result, US regulators have tightened their grip on projects offering digital services. Agencies such as the FTC, and the Securities and Exchange Commission (SEC) have zero tolerance for what seems to be a deceptive crypto ad.
In October, popular reality star Kim Kardashian paid a heavy fine to the SEC for allegedly failing to disclose that she was paid $250,000 to promote the EthereumMax (EMAX) crypto token on social media. Kim isn’t the only celebrity who has been chastised for representing cryptocurrency firms. Recently, NFL superstar Tom Brady and basketball star Stephen Curry were among a long list of US celebrities facing a probe for their involvement with the controversial FTX.
The FTX saga no doubt raised fresh calls for crypto regulation in the United States. U.S. Treasury Secretary Janet Yellen recently called for US regulators to take steps to control the crypto industry and ensure crypto assets had sufficient customer protection. She said, “I have been skeptical, and I remain quite skeptical.”
Yellen noted that it was important to remain receptive to financial innovations, particularly if they could reduce the cost of international transactions and enhance financial inclusion. She, however, claimed that recent advancements had not been about that.
Yellen said in an interview with the New York Times DealBook that the Treasury Department has launched a number of reports outlining serious concerns and that the United States is in talks with allies about regulating cryptocurrencies.
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