A pair of adverts promoting Arsenal’s $AFC fan token have been banned by the Advertising Standards Agency (ASA).
The regular described the ads as potentially misleading Arsenal supporters into buying into the tokens without an appropriate warning that their holding may lose its value.
The ASA also accused the Gunners of ‘taking advantage of consumers’ inexperience or credulity’ with regards to cryptocurrencies and digital property, and not being completely transparent in detailing that the token is in fact a ‘crypto asset’ with the risk of money being lost.
The $AFC fan token is powered by the Socios network, who have come in for plenty of criticism already, and promised supporters who invest the chance to vote on the song that would be played at the end of matches at the Emirates Stadium when Arsenal had won.
To invest in the tokens, fans have to open an account with a crypto exchange and acquire another coin – Chiliz, which is linked to Socios – in order to then get their hands on $AFC. Supporters could also claim a free token, but only after signing up for a Socios account.
“The promotion of free fan tokens, which still needed the user to sign up to a Socios account, to sell a crypto-asset product or sign up for a crypto-asset service, encouraged consumers to engage in such a high risk investment, without consideration and trivialised what was a serious and potentially costly financial decision,” a ruling on the ASA website revealed.
The ads also failed to mention that if $AFC gained in value, those who hold the coin could be liable for paying Capital Gains Tax – another grey area that is concerning a number of different regulations, including the Financial Conduct Authority (FCA).
Fan Tokens Facing Tougher Rules?
In a statement that will be used as a way-marker for future promotions of fan tokens and the Socios platform, the ASA concluded:
“We also told them [Arsenal] to ensure that they did not mislead consumers by omitting material information in their ads, including that fan tokens were a crypto-asset that had to be bought using another cryptocurrency.”
Arsenal have claimed that they will seek an independent review into the ruling, but the head of the AFC Supporters Trust, Tim Payton, believes that the club owes a ‘greater duty-of-care responsibility toward their fans.’
A spokesperson for Arsenal said:
“We take our responsibilities with regard to marketing to our fans very seriously. We carefully considered the communications to fans regarding our promotions and provided information regarding financial risks.”
The main concern with Socios is that it isn’t made abundantly clear that a fan token is a form of cryptocurrency, rather than an asset that holds its value and is simply a vehicle via which supporters can invest in their club.
BBC News carried out their own investigation into fan tokens in December, and they found that clubs had made more than £260 million in the sale of the asset, while Socios had invested £30 million into an expansion into American sports.
But fan tokens remain unregulated, and are not part of the FCA’s Financial Services Compensation Scheme, which helps to protect consumers against losses when a firm is declared bankrupt.
And there have been calls for ministers to create legislation that protects consumers – and ward off a repeat of the Football Index debacle.