The UK’s advertising regulator has labeled two promotions for fan tokens by Arsenal as “irresponsible,” ruling they were misleading customers over the risks of investing in cryptocurrencies and warned the English Premier League club that they mustn’t appear again.
The UK’s Advertising Standards Agency (ASA) ruled that the ads – a Facebook post and a page on the club’s official website – took advantage of supporters’ inexperience and “trivialised” investment in cryptoassets.
Arsenal is one of several leading football clubs selling fan tokens via the Socios app, which offers supporters the chance to influence decisions at their team and access to “exclusive promotions,” according to the Socios website. Arsenal partnered with Socios, which is owned by blockchain sports venture Chiliz, in July.
A Facebook post advertising the club’s $AFC fan tokens on August 12 read “Ben White, Calum Chambers and Kieran Tierney have had their say … But what song do you want to hear when we win? Download the Socios app to get your token and vote.”
And a web page published on August 6 was titled “$AFC Fan Token: Everything you need to know” and included information explaining what the Arsenal Fan Token was and the benefits that it offered.
There are thousands of different types of cryptoassets, or cryptocurrencies, an all-digital money system made up of “coins” or “tokens” that are controlled by a decentralized ledger. Generally speaking, there is no intrinsic value underlying most cryptocurrencies.
Direct ownership and transactions with crypto assets are mostly unregulated and offer very little consumer protection.
The ASA said that Arsenal did not make clear that their “token” was a cryptoasset, which could only be obtained by opening an account and exchanging with another cryptocurrency which had to be purchased.
“The ads must not appear again in the form complained about,” the ASA said, adding that future adverts must not trivialize investment in cryptoassets, and must make it clear to customers that cryptoassets are unregulated, and the value of investments in the products are variable.
“We also told them to ensure that they did not mislead consumers by omitting material information in their ads, including that Fan Tokens were a cryptoasset that had to be bought using another cryptocurrency,” the ASA said.
Arsenal had argued that fan tokens, which are used to encourage fan participation, were “materially different” to cryptocurrencies which were virtual currencies used as a means of payment.
It told the ASA it reminded customers: “We advise you to spend only what you can afford and seek independent financial advice if required,” according to the verdict.
The club said the tokens were promoted responsibly, and that Socios was well known in the footballing community as a cryptocurrency platform because they sponsored and partnered with a number of European football clubs.
The football club intends to seek an independent review of the ASA’s ruling, Arsenal told CNN in a statement.
“We take our responsibilities with regard to marketing to our fans very seriously,” An Arsenal spokesperson said.
“We carefully considered the communications to fans regarding our promotions and provided information regarding financial risks.
“We will endeavour to comply with the ASA’s guidance regarding future communications in this fast moving area, however we will be seeking an Independent Review of the ASA’s ruling to seek greater clarity on the ASA’s current position.”
Socios told CNN that the company welcomed Arsenal’s call for an independent review.
“We welcome Arsenal’s call for an independent review,” a Socios spokesperson told CNN. “Clarity is needed to ensure all companies can adhere to the latest guidelines,” a Socios spokesperson told CNN.
In August, the Arsenal Supporters Trust (AST) warned: “Socios.com is a cyptocurrency product yet none of the marketing we have seen so far addresses this. We have asked Arsenal to be upfront in stating this.
“They should also make it clear in their communications that cryptocurrency is an unregulated activity and that anyone thinking of putting any money in should firstly take financial advice and be aware they could lose some or all of their money.”
Following the ASA ruling, the AST tweeted: “If you are Arsenal fan be extremely cautious of Socios. You don’t need it to engage with Arsenal and you have a high chance of losing your money.”