UK watchdog slams crypto platform Ziglu ad as misleading
The UK Advertising Standards Authority (ASA) today issued a ruling against a digital poster for Ziglu, an online cryptocurrency platform.
The ad was seen in September 2021. The ad had headline text that stated “Scotland, your capital is at risk” in large print. Underneath this was text that stated, “ziglu.io/capital” within an image of an online search bar. Small print at the bottom of the ad stated, “As with any investment, your capital is at risk. As Ziglu is not a bank, investments are not covered by the Financial Compensation Scheme. Ziglu Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 (Firm Reference No.900977).”
- A complainant challenged whether the ad caused unjustifiable distress because it implied that the capital of all Scottish consumers’ was at risk.
The ASA challenged whether the ad was:
misleading because it did not make clear it was referring to cryptocurrency; and
was irresponsible because it took advantage of consumers’ inexperience or credulity.
The headline claim in the ad was “Scotland, your capital is at risk”. With the exception of the small print, that said that capital was at risk with any investment, the ad gave no other explanation or context to the headline claim and did not explain that the ad was promoting cryptocurrency. The ASA therefore considered that consumers would interpret the claim “Scotland, your capital is at risk” to mean that the capital of all Scottish residents was at risk to the same degree, regardless of how that capital was held. In doing so encouraged consumers to respond to that warning by visiting the webpage ziglu.io/capital, which was a page of their website dedicated to promoting investment in their cryptocurrency services.
The Authority considered the claim’s suggestion that all Scottish consumers’ capital was currently at risk was one that was likely to shock and cause distress, particularly because the ad gave no explanation or indication why that was the case or explanation that different asset classes were subject to varying degrees of risk. Given that the intention of the ad was to promote cryptocurrency, which unlike many other forms of asset classes, was entirely unregulated and unprotected, the ASA understood that the capital of all Scottish residents was not at risk in the way the ad implied.
The ASA considered that the ad was likely to cause unjustifiable distress and concluded that it breached the Code.
The Authority acknowledged that Ziglu provided a number of financial services including cryptocurrency services and foreign currency debit cards, but the only products they offered that were not regulated by the FCA were their cryptocurrency services. The watchdog further noted that the link ziglu.io/capital led to a page on the Ziglu website that specifically promoted their cryptocurrency services and related Bitcoin Boost and Sterling Boost accounts which were themselves a means to invest in bitcoin and stablecoin services.
However, the ad itself gave no further indication that the investment being promoted was for cryptocurrency services. The ASA understood that cryptocurrencies and other forms of cryptoassets were complex and high-risk investments. The risks of investing in them were not well understood by the general public and as such would not be suitable for many consumers.
The ASA therefore considered the fact that the ad was promoting cryptocurrency services, was material information that consumers needed in order to be able to make an informed decision in relation to engaging further with the product being advertised. Therefore, because the ad did not make it clear it was promoting cryptocurrency services, the ASA concluded that the ad was misleading.
On that point, the ad breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.9 (Qualification).
Furthermore, because the Authority considered that the ad took advantage of consumers’ inexperience or credulity by not making clear that Capital Gains Tax CGT could be payable on profits from investing, it concluded the ad was irresponsible and breached the Code.
On that point, the ad breached CAP Code (Edition 12) rules 1.3 (Social responsibility), and 14.1 (Financial products).
The ASA says the ad must not appear again in its current form. The body told Ziglu Ltd t/a Ziglu to ensure that their future ads did not cause unjustifiable distress. The ASA also told them to ensure they made sufficiently clear that the product advertised was cryptocurrency. It further told them to ensure that they did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear tax could be due on cryptocurrency.