Facebook’s announcement that it would ban all ads for cryptocurrencies and ICO’s, as well as reports that two major exchanges, Bitfinex and Tether, had been investigated by the US regulators, also helped to spook the cryptocurrency market this week.
Facebook further says it is banning all ads related to cryptocurrencies in an effort to fight scams. Global social media giant said it is barring ads for “financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.”
Initial coin offerings or ICOs are a way for companies to raise funds by selling investors cryptographic assets. Fraud is common in the world of red hot digital currencies such as bitcoin.This week, for instance, the US Securities and Exchange Commission shut down an initial coin offering by a Texas company called AriseBank.
AriseBank was accused of relying on celebrity endorsers such as boxer Evander Holyfield and social media to cheat investors out of $600 million of its goal of $1 billion for a currency it called “AriseCoin.”
In a blog post announcing the news, Facebook product management director Rob Leathern hinted that Facebook may modify the new policy at some point to allow bona fide crypto-related businesses to advertise again.
“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception,” Leathern wrote. “That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.”
“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve,” he added.
“Lots of news regarding regulation is causing the market to panic,” a quantitative developer and data scientist at Cypher Capital, Nick Kirk, told CNBC.
All the leading cryptocurrencies except two were trading lower on Friday.
Ethereum was the only major coin to finish January on a positive note. The second-largest cryptocurrency saw gains of 45 percent during 2018’s first month, compared to a loss of 25 percent for bitcoin, and respective declines of 45 percent and 35 percent for ripple and bitcoin cash.
“The state of cryptocurrency is incredibly strong,” Andy Bromberg, CEO of CoinList, an ICO hosting platform, told Business Insider. “Looking far beyond the prices, we’re seeing an increasing number of high-quality projects in the space, with experienced teams, impressive early technological breakthroughs, and rigorous legal structuring.”
Kirk, ethereum will outperform bitcoin “by a country mile.”
“We think the war between bitcoin and bitcoin cash is having a negative effect on bitcoin sentiment,” he said.
