An influential consumer group on Thursday criticized TikTok, Twitter, YouTube and Instagram for the proliferation of misleading cryptocurrency advertisements on social media platforms, in a complaint to consumer protection authorities and the European Commission. This raises the possibility of regulatory action in the European Union, where international pressure mounts to rein in the industry and protect consumers.
- The European Consumers Organization (BEUC) has filed a complaint with the European Commission and consumer protection authorities for “allowing misleading advertisements about crypto assets to proliferate on their platforms.”
- Les incontisheshems dans les Crypto-Actifs sont Très Volats et spéculatifs, exposant les consommateurs à de Graves préjudices, notamment des escroqueries et la posingé de period Re De Grosses Sommes D’Argent, Indique La Plainte, Qui a été Déposée Conjointment avec Neuf Des Organisations MEMBRES group.
- Despite the well-documented risks and growing hype around investing in cryptocurrencies, the complaint notes that few consumers are fully aware of the risks they are taking and that advertisers and influencers promoting cryptocurrencies on the platforms are not clearly disclosing them.
- “Advertising and social media influencers increasingly promise consumers investments that will allow them to get rich quick,” said Monique Gwen, CEO of BEUC. Many of these promises turn out to be “too good to be true” and put consumers at risk of losing a lot of money with no recourse.
- BEUC urged the European Cooperation Network for Consumer Protection (CPC), a coalition of national regulators working together at EU level, to impose stricter policies on cryptocurrency advertising platforms and take steps to prevent “influencers from misleading consumers about the nature of cryptocurrencies.”
- The group also urged European consumer protection authorities to work with financial watchdogs to prevent misleading promotion of cryptocurrencies.
Regulators, either at the European or national level, can pursue a complaint against social platforms and possibly take regulatory action to punish companies or encourage them to change their practices. It is unclear whether or not they will choose to do so, and if so, in what time frame.
BEUC also asked the European Consumer Protection Authorities Network to assess the effectiveness of measures it has put in place to protect consumers from unfair practices such as misleading cryptocurrency advertisements. The European Commission is one of the three central institutions of the European Union and a powerful driver of new legislation and regulations of international importance. Although the consortium recently approved the world’s first comprehensive set of cryptocurrency rules – which will take effect in 2024 – Mr. Goins said the legislation “does not apply to social media companies that profit from cryptocurrency advertising at the expense of consumers”, making Leaves potential space for future organization.
Although cryptocurrencies are not infancy, interest in them has increased in recent years. Many areas of the market are struggling to conform to or even exceed existing rules, leaving lawmakers and regulators who have failed or refused to keep up with the industry forced to catch up. Unpredictable and volatile markets, theft, fraud, misinformation and false advertising have all grown along with interest. Celebrities and high-profile personalities such as Kim Kardashian, Lindsay Lohan and Jake Paul are fueling the hype and promoting cryptocurrency tokens to their followers, which regulators say may be illegal. The collapse of major institutions, such as FTX, founded by Sam Bankman-Fried, and allegations of widespread misconduct by Binance have exposed a lack of law enforcement and given a mail blow to regulators for taking the sector seriously.
Translated article from the American magazine Forbes – Author: Robert Hart
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