- Twitter is planning to ban advertising for cryptocurrencies and initial coin offerings as a way to combat deceptive marketing practices, Sky News reported. The policy will go into effect in two weeks, following similar moves by Facebook and Google to restrict ads for digital coins.
- The ban would also block ads for cryptocurrency wallets, exchanges and token sales. Twitter CEO Jack Dorsey earlier this month said the company was "on it" when cryptocurrency watcher Emin Gün Sirer highlighted cryptocurrency-related scams on the social network.
- Twitter this month began removing accounts that impersonate celebrity endorsements of cryptocurrency, according to The Verge. Several scammers in recent weeks have impersonated Ethereum co-founder Vitalik Buterin, Elon Musk or John McAfee.
Twitter's plans to ban cryptocurrency ads may help to curtail the propagation of scams, particularly after Facebook and Google imposed similar bans. While cryptocurrencies and blockchain technologies have enormous potential to transform the way transactions are conducted electronically, the nascent industry is largely unregulated and has become ripe for scams. That's especially true following the explosive growth in the value of cryptocurrencies like Bitcoin, Ethereum and Litecoin in the past few years. There has been a digital gold rush into cryptocurrencies of late, and many proponents of the technology have expressed dismay at the number of questionable currency offerings that have popped up as a result of the booming space.
Cryptocurrency news site Bitcoin.com surveyed the 902 initial coin offerings (ICOs) from last year and found that 142 failed before raising funding, while another 276 failed after fundraising, TokenData reports. In some cases, supposed founders of the coins disappeared with the money that they raised, according to Fortune.
The U.S. Securities and Exchange Commission has taken notice of ICOs, and in September issued its first fraud charges against the marketer of REcoin, whose founder claimed the digital currency was backed by real estate, per Sky News. A group of investors in January sued BitConnect alleging that the cryptocurrency exchange platform was a "wide-reaching Ponzi scheme." The plaintiffs said they lost $771,000 to BitConnect and asked to sue on behalf of investors nationwide, per Fortune. With the possibility that some ICOs are possible scams, social media platforms like Twitter and Facebook need to be careful that they aren’t blamed for being an accessory to fraud.