The UK’s advertising watchdog has banned two advertisements for Arsenal Football Club’s crypto-based fan token scheme, claiming they misled fans about the risks of cryptocurrency investing.
According to the Advertising Standards Authority, the club failed to disclose that the value of investments in the tokens could fluctuate nor that the crypto assets were unregulated. The decision was the ASA’s second against Arsenal, who had filed an appeal against a previous decision last year.
How does the Arsenal token system works?
Arsenal’s fan token scheme allows fans to purchase non-fungible tokens through NFT company Socios, which grants them voting rights over club decisions in exchange for a token they must buy with cryptocurrency Chiliz.
However, the ASA decision upheld the watchdog’s earlier decision that the advertisements — one on Arsenal’s website and one on Facebook — were deceptive.
It claimed that the advertisements “trivialized investment in crypto assets and took advantage of consumers’ inexperience or credulity” by omitting risk warnings about crypto as an investment class.
A complicated issue!
Meanwhile, fan token schemes have proven to be a complicated issue, with clubs selling NFTs for images of famous sporting moments to fans in exchange for cryptocurrency. However, with the value of crypto assets and tokens plummeting spectacularly in May and June, many ordinary retail investors have been left with significant losses.
The ASA initially barred the posts from Arsenal’s website and Facebook page in late 2021, claiming the club had misled fans “over the risk of investment and failing to make it clear the ‘token’ was a crypto asset.”