FTC Investigating Crypto Firms For Possible Misconduct, Deceptive Advertising
According to a recent report, the Federal Trade Commission is investigating multiple digital asset companies for various types of misconduct. While the firms remain unnamed, they allegedly engaged in deceptive marketing.
FTC Investigating Several Companies for Digital-Assets-Related Misconduct
The Federal Trade Commission, the agency responsible for enforcing civil antitrust law and promoting consumer protection, is reportedly investigating multiple cryptocurrency companies. While the firms remain unnamed, it is alleged they engaged in misleading and deceptive marketing. Speaking to Bloomberg, FTC spokeswoman Juliana Gruenwald Henderson said that the agency is “investigating several firms for possible misconduct concerning digital assets”.
Earlier in 2022, UK’s regulators issued a warning to numerous crypto companies over their own misleading advertising. In the US, the Federal Deposit Insurance Corporation (FDIC) sent a series of cease-and-desist orders in late August to five companies—including FTX US—due to misleading statements on the matter of their relationship with FDIC.
More recently, multiple celebrities found themselves in the crosshairs of angry investors for their role in advertising FTX. In mid-November, a class-action lawsuit was filed against Larry David, Tom Brady, and multiple other big names over their involvement with the now-collapsed crypto exchange.
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Crypto Regulation Throughout 2022
In many ways, 2022 has been marked by a heightened regulatory focus on digital assets. While the bulk of the focus has been on the many actions undertaken by various agencies like the CFTC, it is noteworthy that September saw the first-ever White House framework on digital asset regulation.
The Securities and Exchange Commission and its Chair Gary Gensler took much of the spotlight and much of the criticism with one Congressman even calling his agency a “shakedown authority” when it comes to cryptocurrencies. However, there has also been something akin to interservice rivalry, as the CFTC has also been seeking more authority over the industry.
The current state of digital asset regulation has been called impossible to navigate by UK-based Nexo, which recently announced it would be leaving the American market. Additionally, the pressure hasn’t been coming only from the Federal authorities. Multiple state authorities have been active in their own efforts to regulate crypto. For example, California’s DFPI filed a series of complaints against 11 companies and accused them of being Ponzi schemes.
The increased scrutiny hasn’t been confined to the United States. The European Union has also been pursuing its own regulatory agenda, and its watchdog announced already in August it would be increasing scrutiny. On the other hand, not all agencies have been equally hawkish toward crypto. Recently, the Belgian regulatory agency published a document explaining that assets like Bitcoin and Ethereum don’t fall under the country’s definition of financial instruments or securities.
Do you think regulators should work on creating clearer guidelines before further tightening their scrutiny? Let us know in the comments below.