ASA: UK Advertising Regulator Sanctions Crypto Derivatives Platform BitMEX for “Misleading” Ad

The UK’s Advertising Standards Authority has upheld complaints against crypto-derivatives trading platform BitMEX claiming the company violated UK advertising standards with an ad it published on the front page of a national newspaper in January.

According to the ASA, the “misleading” ad featured a logarithmic graph showing “exaggerated returns” on Bitcoin between 2009 and 2019.

The regulators took issue with the graph which appears to show relatively modest volatility in the price of Bitcoin in recent years:

“We noted that the graph used a logarithmic scale on its y-axis which meant that the equally spaced values on that scale did not increase by the same amount each time and instead increased by orders of magnitude. In practice this meant that the y-axis of the graph increased incrementally by the power of ten. For example, after zero the scale went to 1, then 10, then 1000, up to 100,000, unlike an arithmetic scale which would increase by the same amount each time (100, 200, 300 etc.). This meant that the space at the top of the graph between 10,000 and 100,000 represented a change of $90,000 whereas the same space further down the graph represented only fractions of one dollar.”

The ASA says BitMEX argued that the graph in fact, “significantly understated the scale of the rise in its value which appeared as modest upward growth rather than the approximately 5,200,000% growth from 18 August 2010. They said the logarithmic scale was the only sensible way of depicting such a significant increase.”

While acknowledging that the logarithmic graph may be a better way to depict charges in a tight field, the ASA also said a general audience might fail to identify that the chart was logarithmic:

“(W)e considered that at least some specialist knowledge of that type of scale would be needed to interpret the graph and that, in the absence of clear explanatory information, the graph was unlikely to be familiar or readily understandable to the national newspaper audience to whom the ad was directed.”

The regulator also said that text features of the ad failed to temper the reassuring impression given by the graph:

“In addition, we did not consider that the text alongside the graph which stated that Bitcoin was ‘still very much an experiment,’ that ‘the road ahead will be challenging’ or ‘price volatility’ mitigated the overwhelming impression about Bitcoin’s value created by the graph.”

BitMEX claimed the ad was published to commemorate the ten-year anniversary of the invention of Bitcoin and was not taken out to promote the platform or its products.

But the ASA found that the ad was promotional.

As well, though the ad featured text acknowledging volatility:

“Despite price volatility and how entirely bonkers the system seems, the Bitcoin protocol appears robust. And although the road ahead will be challenging, there’s a reason to believe Bitcoin’s still got a chance at glory…”

…the ASA says it ultimately failed to realistically warn investors about the risks of investing in cryptocurrencies:

“We considered that was a clear promotional statement of Bitcoin’s merits and did very little to warn consumers of any risks. For those reasons we considered that the ad had misleadingly exaggerated the return on investment, failed to illustrate the risk of the investment and therefore concluded it was in breach of the Code.”

The ASA says it received four complaints about the BitMEX ad, and said it, “…must not appear again in its current form.”

The ASA also says, “We told HDR Global Trading Ltd to ensure that financial information in their ads was set out in a way that allowed it to be readily understood by the audience being addressed and that the risks of investments were sufficiently clearly signposted.”

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