The UK Advertising Standards Authority (ASA) has found a press ad for Coinfloor Ltd, a Bitcoin and cryptocurrency exchange, to be misleading.

The Authority has investigated complaints into two issues regarding this ad and has upheld the complaints.

The ad in focus was a regional press ad for Coinfloor, seen in the Northamptonshire Telegraph in December 2020. The title said “There is no point in keeping your money in the bank…”. It featured an image and the name of a woman, described as aged 63, and text stated:

“More and more people are waking up to the savings power of Bitcoin… When [name] turned 60, she received part of her pension from a previous job and decided to research the market for the best way of investing it… When I received my pension, I put a third of it into gold, a third of it into silver and the remainder into Bitcoin… To me, Bitcoin is digital gold and it has allowed me to take the steps to secure the cash I already have… Thanks to Coinfloor’s Autobuy service, buying and holding Bitcoin has never been easier – there was just a simple sign-up process and then I could buy Bitcoin automatically straight from my bank account […]’.

Small print at the bottom of the ad stated “Investing in cryptocurrencies involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose”.

The complaints challenged whether the ad was:

• 1. misleading, because it failed to make clear the risks associated with Bitcoin investments, including loss of capital, and that neither Coinfloor Ltd nor the general Bitcoin market were regulated in the UK; and
• 2. socially irresponsible, because it suggested that purchasing Bitcoin was a good or secure way to invest one’s savings or pension.

The ASA understood that initial capital invested in Bitcoin was subject to price fluctuations which could result in both losses and gains in value. 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, and also that significant limitations and qualifications were stated and presented clearly.

The ad included a small print disclaimer at the bottom of the page stating “Investing in cryptocurrencies involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose”. However, the ASA considered the disclaimer was insufficient to counteract the overall message of the ad that buying Bitcoin represented a secure investment, and given the font size and its positioning it had not been presented clearly or prominently enough to ensure consumers were made aware of the risk of loss of capital.

The ad appeared in a regional newspaper targeted to a general readership and the ASA considered the audience was therefore unlikely to have extensive financial knowledge and experience on the nature of cryptocurrencies and Bitcoin, and may expect that the exchange of Bitcoin would be regulated, with legal protection in place for investment activities.

Furthermore, the ASA notes that neither Coinfloor nor the general Bitcoin market were 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.

The ad directly compared investing savings in Bitcoin with the use of regulated services, discouraging consumers from placing their money in banks. Particularly in light of that context, the ASA considered the fact that Coinfloor Ltd and the Bitcoin market were unregulated to be material information that consumers required in order to make informed decisions about Coinfloor’s product, and should have been made clear in the ad.

The ASA therefore concluded that the ad was misleading because it had not made sufficiently clear that the value of Bitcoin could go down as well as up, or that the Bitcoin market was unregulated in the UK, and was in breach of the Code.

Also, ASA determined that the statement “To me, Bitcoin is digital gold and it has allowed me to take the steps to secure the cash I already have” in particular suggested that buying Bitcoin represented a secure investment. The Authority therefore considered that the statements “Bitcoin Savings portfolio”, and “the savings power of Bitcoin”, added to the overall impression that funds invested in Bitcoin through Coinfloor were safe and would not reduce in value.

ASA concluded that the ad irresponsibly suggested that purchasing Bitcoin through Coinfloor was a secure way to invest one’s savings or pension, particularly given that the audience it addressed were likely to be inexperienced in their understanding of cryptocurrencies, and therefore was in breach of the Code.

The Authority ruled that the ad must not appear again in its current form. ASA told Coinfloor Ltd to ensure that future marketing communications made sufficiently clear that the value of investments in Bitcoin was variable and could go down as well as up, that Coinfloor Ltd and the Bitcoin market were unregulated, and that they also did not irresponsibly suggest that purchasing Bitcoin represented a secure investment of one’s savings or pension.