Arsenal Football Club has been rapped by the advertising watchdog for misleading fans about cryptocurrency in a promotion involving senior players Calum Chambers and Kieran Tierney.
The Premier League side teamed up with Blockchain provider Chiliz this summer to offer crypto tokens to supporters.
Fans were promised a say in club decisions if they bought just one of the $SFC fan tokens using the cryptocurrency Chiliz.
A Facebook post and information posted on the club’s website in August breached advertising rules on social responsibility, financial products, misleading advertising and qualification, the Advertising Standards Authority ruled.
An advert posted on the club’s Facebook page on 12 August told fans about the supposed benefits of the brand-new tokens, and included a video featuring aces Ben White, Calum Chambers and Kieran Tierney.
It was promoting the crypto scheme, which gave fans the chance to influence the club season through interactive surveys, forums and polls, by telling them they could choose which song they sung after winning matches.
The ad said ‘$AFC in now live $CHZ’ and ‘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.’
Information posted on the club’s website on 6 August heaped praise on the crypto tokens and only told fans they could lose money right at the bottom of the page.
It said: ““In order to buy $AFC fan tokens you need to purchase the cryptocurrency Chiliz.
“Please remember that the future value of Fan Tokens is dependent on supply and demand and can therefore go up as well as down.
“Fans should be aware that they could lose some or all of their money invested. We advise you to spend only what you can afford and seek independent financial advice if required.”
The regulator examined complaints that the adverts were irresponsible because they took advantage of fans' inexperience with cryptocurrency and trivialised investment in it, that they misled fans about the risks of the investment and that they were misleading because they did not clearly say the ‘token’ was a cryptoasset which could only be bought by buying cryptocurrency.
All three complaints were upheld and the club has been told not to advertise the crypto scheme in the same way again.
The regulator rejected claims by Arsenal that the tokens were not marketed as cryptocurrencies and said that, while it was true that customers could not trade the tokens on the app for six weeks, the adverts stayed up for much longer.
It said the club’s failure to make clear any profits made from selling the tokens would be liable for capital gains tax amounted to ‘trivialising’ investment in cryptoassets.
It said the advert was misleading because it did not mention the risks of cryptocurrencies at all, and said the online information was also misleading because vital information was right at the bottom of the page.
Customers were also misled because they were not told the token was a cryptoasset or that cryptocurrencies are not regulated in the UK.
The regulator said in a ruling: “We understood that cryptoassets were a complex and sophisticated investment, subject to frequent change in value and one that could potentially lead to large losses.
“We considered the decision to open a cryptoasset exchange account, with the potential to engage with and invest in such a financial product, was one that required careful thought and consideration.
“We noted that Arsenal members would receive one free Fan Token. However, to use this token a consumer had to sign up for the Socios account and this would give users the potential to buy and trade more tokens in the future.
“The promotion of free Fan Tokens, which still needed the user to sign up to a Socios account, to sell a cryptoasset product or sign up for a cryptoasset service, encouraged consumers to engage in such a high risk investment without consideration and trivialised what was a serious and potentially costly financial decision.”
It added: “We told Arsenal Football Club PLC to ensure that their future ads did not trivialise investment in cryptoassets and did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that CGT could be due on cryptoasset profits.
“We told them to ensure that they made sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated.
“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."
Arsenal denied all the claims.
It claimed all promotional material about the tokens was to ‘raise awareness’ of the ‘inherent benefits’ of owning them because they allowed fans to have a voice in club decisions.
It said fans were told the tokens were not financial products, claimed they were not the same as cryptocurrencies and said could not be traded on the app for an initial six weeks.
It claimed people were reminded only to buy what they could afford and had put risk warnings in place, and said they thought fans would understand how cryptocurrencies work.
Telling customers they needed to pay capital gains tax on any profits from selling the tokens would have ‘misled’ and ‘confused’ fans, it added.
