At first glance nothing seemed out of place with Prodeum’s initial coin offering (ICO). The Lithuanian startup claimed to be looking to raise $6.5m to launch a blockchain service for vegetables and fruit. But having launched the campaign last Thursday, the startup had suddenly vanished from the web by Monday, leaving only a crude word at the top corner of its website. It transpired that the campaign was just an ICO scam. However, from now on it could be more difficult for similar fraud to gain traction, as Facebook has just launched a new policy banning ads promoting ICOs, cryptocurrencies and binary options.
Announced in a blog, the new policy will prohibit advertisement on Facebook and Instagram that encourages people to invest in bitcoin and other services frequently associated with dishonest promotional practices. Even though the tech giant recognises that a lot of people like to discover new products and services on its platforms, it wishes to protect them from scams and fraud. “Misleading or deceptive ads have no place on Facebook,” said Rob Leathern, product-management director at Facebook. He added that the policy is intentionally broad to begin with as this will enable Facebook to better develop ways to detect deceptive ads. “We will revisit this policy and how we enforce it as our signals improve,” Leathern said.
While issuing their own cryptocurrencies through ICOs enables entrepreneurs to raise funds, it seems as if some startups welcome Facebook’s initiative. Commenting on the policy, Thomas Bertani, CEO of Eidoo, the blockchain startup that has an ICO platform of its own, said: “Facebook’s reaction was to be expected, bearing in mind the context in which the company is currently [fighting] fake news. For the time being, banning all ads relating to ICOs or bitcoin could garner the company time to formulate an intelligent and informed approach to the sector once it starts to consolidate. This will be beneficial to both the end user and those in the crypto space. [Once] the current froth in the space settles and various bubbles deflate it will be an area that Facebook cannot ignore.”
Given there have been increasing calls for cryptocurrencies and ICOs to be better regulated over the past few months, we hope Facebook’s policy may lead to some clarity in this space.