Several months after the UK Advertising Standards Authority (ASA) slammed Arsenal Football Club for its crypto ad, the body has published a new ruling in this case.

The new ruling replaces the ruling published in December 2021. Following an independent review, the ASA decision to uphold the complaints remains unchanged but on revised grounds.

The ad in question represents a Facebook post and website for Arsenal Football Club:

1. The post on Arsenal’s Facebook page, posted on 12 August 2021, included text that stated, “$AFC in now live $CHZ” and “Ben White, Calum Chambers and Kieran Tierney have had their say… But what song do you want to hear when we win? Download the Socios app to get your token and vote”. The ad included a video featuring footballers Ben White, Calum Chambers and Kieran Tierney.
2. The website included a webpage published on 6 August 2021 with the title “$AFC Fan Token: Everything you need to know” and included information explaining what the Arsenal Fan Token was and the benefits that it offered. The page included text at the bottom that stated, “In order to buy $AFC fan tokens you need to purchase the cryptocurrency Chiliz. Please remember that the future value of Fan Tokens is dependent on supply and demand, and can therefore go up as well as down. Fans should be aware that they could lose some or all of their money invested. We advise you to spend only what you can afford and seek independent financial advice if required.”

The ASA challenged whether:

1. ads (a) and (b) were misleading because they failed to illustrate the risk of the investment;
2. ad (a) was misleading because it did not make clear that the tokens were cryptoassets, which could only be obtained by opening a cryptoassets exchange account, and in the case of paid-for fan tokens, required the purchase of another cryptocurrency; and

3. ads (a) and (b) were irresponsible because they took advantage of consumers’ inexperience or credulity and trivialised engaging with and investing in cryptoassets.

The ASA understood that there were two versions of the Fan Token. One, available to existing Arsenal members only, which was free, and could not be transferred from the owner or traded and therefore was not considered an investment. To obtain the free token a consumer had to login to their Arsenal account, redeem a voucher code, download the Socios app, create an account and a crypto wallet and enter the voucher code.

The second was paid-for Fan Tokens which were available both to members and to the general public. They could be obtained by downloading the Socios app, setting up an account and a crypto wallet, buying the cryptocurrency $CHZ with either a debit card or credit card and then exchanging $CHZ for the Fan Token. They could be transferred, and were tradeable at fluctuating prices and therefore were considered an investment.

Holders of both kinds of tokens also enjoyed rights to vote on certain club decisions and the voting rights of holders increased in line with the amount of fan tokens that they owned.

The ASA considered that both ads (a) and (b) were promoting both free and paid-for Fan Tokens. In particular, the Authority noted that ad (a) was contextualised by a series of social media posts which promoted paid-for Fan Tokens and that ad (a) appeared on the same day that paid-for Fan Tokens became available for sale.

Ad (a) also referenced $CHZ which was the shortened name for Chiliz, the cryptocurrency used to purchase paid-for Fan Tokens. Further to this ad (a) was posted on Arsenal’s general Facebook account and therefore was not targeted only at members by either the placement or the content, and it did not mention the free coin or the specific process a member would have had to follow to get the free token.

The CAP Code required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up. It also required that significant limitations and qualifications were stated and presented clearly. The ASA understood that paid-for Fan Tokens were a cryptoasset and could be used as an investment, even if not marketed as a product that could generate a return. The ASA also considered that paid-for Fan Tokens were cryptoassets which were a volatile investment, subject to frequent change and one that could potentially lead to large losses.

The ads appeared on the Arsenal website and Facebook page and were therefore likely to have been seen by a general audience including consumers who did not have financial knowledge and experience of cryptoassets. The ASA considered consumers would expect that the exchange of paid-for Fan Tokens would be regulated, with legal protection in place for investment activities.

The Authority understood, however, that cryptoasset services in general were not regulated within the UK, and therefore consumers could not seek recourse to services such as the Financial Services Compensation Scheme or the Financial Ombudsman Service.

In addition, the ASA noted the warning did not make consumers aware that paid-for Fan Tokens were unregulated in the UK.

Therefore, because ad (a) did not include any risk warning making consumers aware that paid-for Fan Tokens were cryptoassets which were unregulated in the UK and cryptoassets could go down as well as up, and because the risk warning in ad (b) was not prominent and did not state that paid-for Fan Tokens were cryptoassets which were unregulated in the UK, the ASA concluded the ads were misleading.

Ad (a) only referred to Fan Tokens as a “token”, it included no warnings about the risks associated with cryptoassets, it did not state that Fan Tokens were cryptoassets, or that to buy paid-for Fan Tokens consumers had to first purchase another cryptocurrency, Chiliz. The ASA therefore considered consumers were unlikely to understand that the ad referred to cryptoassets.

To obtain the free Fan Token a consumer had to download the Socios app, set up an account and download a cryptoasset wallet. Socios was a cryptoexchange account and by registering, it allowed the user to purchase paid-for Fan Tokens in the future.

The ASA considered that free Fan Tokens were therefore cryptoassets, albeit non-tradeable. Therefore, the body considered that was material information that consumers needed in order to be able to make an informed decision to enquire further. The ASA noted that ad (a) did not explain that free Fan Tokens were cryptoassets or that obtaining a free Fan Token required the consumer to open up a cryptoasset exchange account and therefore we concluded the ad was misleading on that basis.

Paid-for Fan Tokens had to be bought by first purchasing a cryptocurrency; and the ASA considered that was material information that consumers needed in order to make an informed decision to enquire further. The Authority acknowledged that the Socios app explained that to purchase paid-for Fan Tokens it was necessary to buy the cryptocurrency Chiliz. However, the ad linked to the Socios log-in page, which had no immediate information about cryptoassets. In addition, the ASA considered that the ad itself should have included that information.

Because ad (a) did not include material information that paid-for Fan Tokens had to be exchanged with another cryptocurrency, the ASA concluded the ad was also misleading on that basis.

Guidance published by the FCA stated that utility tokens could be redeemed for access to a specific product or service and therefore differed from other unregulated cryptoassets such as Bitcoin, which were primarily used as a means of exchange. However, they were nevertheless categorised by the FCA as cryptoassets, as were cryptocurrencies, and as such the ASA considered paid-for Fan Tokens could be used as a form of investment, regardless of how they were promoted.

In addition while the ASA noted Arsenal’s comment that the trading facility for Socios was not available when the ads were published, thereby preventing consumers trading Fan Tokens for six weeks, the ads had continued to remain live, when trading on Socios was available and had been for a number of months.

The ASA considered the decision to open a cryptoasset exchange account, with the potential to engage with and invest in such a financial product, was one that required careful thought and consideration. The ASA noted that Arsenal members would receive one free Fan Token. However, to use the token a consumer had to sign up for a Socios account and that would give users the potential to buy and trade more tokens in the future. The ASA further understood that paid for cryptoassets were a complex and sophisticated investment, subject to frequent change in value and one that could potentially lead to large losses.

The ASA acknowledged that the ads did not promote Fan Tokens as an investment or financial product; however, Fan Tokens were cryptoassets regardless of how they were promoted and the ads did not contain any information that CGT could be payable on profits from the sale of paid-for Fan Tokens. The ASA therefore considered the potential tax implications were not made sufficiently clear to consumers considering investing in paid-for Fan Tokens.

Therefore, because the ads trivialised investment in cryptoassets and took advantage of consumers’ inexperience or credulity by not making clear that CGT could be payable on profits from investing in paid-for Fan Tokens, the ASA concluded the ads were irresponsible and breached the Code.

The ads must not appear again in the form complained about. The ASA told Arsenal Football Club plc to ensure that they made sufficiently clear that the value of investments in paid-for Fan Tokens was variable and as cryptoassets they were unregulated.

The Authority also told them to ensure that they did not mislead consumers by omitting material information in their ads, including that free fan tokens would require a consumer to open up a cryptoassets exchange account and that paid-for Fan Tokens were a cryptoasset that had to be bought using another cryptocurrency.

The ASA told them to ensure that their future ads did not trivialise investment in cryptoassets by omitting appropriate and prominent risk warnings and did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that CGT could be due on cryptoasset profits.