Cryptocurrency and Advertising: Facebook, Google and Twitter Sued for $600 Million
Bans dating back to 2018
On Sunday 19 July 2020, the Daily Mail Australia published a report that contractors and private individuals in the crypto industry represented by Sydney-based JPB Liberty are suing Google, Facebook and Twitter in a class action lawsuit.
Bans dating back to 2018
Let’s first go back to the time when it all began. In fact, in 2018, most cryptocurrency exchanges were unregulated.
First, it was Facebook, the social networking giant, which said it would block all advertising promoting products and services in crypto currency.
In a January 30, 2018 blog post, Rob Leathern, the company’s director of product management, wrote that the new policy targets ‘advertisements that promote financial products and services that are frequently associated with deceptive or misleading promotional practices, such as binary options, token offers and cryptocurrency’.
The company said it was open to emerging technologies, but Leathern went on to write:
‘We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception. Having said that, there are many companies advertising binary options, OICs and cryptocurrency that are currently not bona fide’.
Then, in March 2018, it’s Twitter’s turn to join Facebook by also banning advertising for ICOs (Initial Coin Offering) (financing used to raise funds by creating new cryptos), the sale of tokens, exchanges and portfolio services excluding public companies listed on major stock exchanges.
‘We have added a new policy for Twitter announcements related to cryptos. Under the new policy, advertising of Initial Coin Offers (ICOs) and token sales will be banned worldwide.
Among these changes, the company will no longer allow advertising of crypto-related content, including ICOs, crypto exchanges, crypto wallets and advice on crypto transactions.
Google’s director of sustainable advertising, Scott Spencer, told CNBC:
‘We don’t have a crystal ball as to where the future will take us with cryptos, but we’ve seen enough potential harm or risk to consumers that this is an area we want to approach with extreme caution.’
In May 2019, more than a year after its total ban, Facebook said it would no longer require pre-approval for ads related to blockchain technology, also covered by the ban, while adding that it will continue to ban ads related to the sale of tokens or initial offer of parts (ICO). Ads that promote cryptography and closely related products, such as crypto exchanges, still have to go through a review process to obtain permission to be online on Facebook. Facebook said:
‘This process will continue to take into account the licenses they have obtained, whether they are traded on a public exchange (or are a subsidiary of a public company) and other relevant public information about their business’.
Google reacted earlier (in October 2018), lifting parts of its bans and allowing regulated exchanges to buy advertising from the technology giant in the US and Japan.
Google then explained:
‘Google Ads’ policy on financial products and services will be updated in October 2018 to allow regulated crypto exchanges to advertise in the US and Japan. Advertisers will have to be certified by Google for the specified country in which their ads will be shown. Advertisers will be able to apply for this certification as soon as the policy is launched in October. This policy will apply globally to all accounts that advertise these financial products’.
For Twitter, it is not yet time to lift the ban on ICO advertising, token sales, stock exchanges and portfolio services.
Represented by the Sydney-based law firm JPB Liberty, these owners of Australian cryptocurrency companies claim to have been harmed by the ban on their advertising and are seeking damages amounting to AUD 872 million or US$600 million.
The companies and individuals, represented by Sydney-based JPB Liberty, say their business was harmed when Google, Facebook and Twitter all banned advertising for crypto currencies in 2018.
If others join the cause, the figure could rise to $300 billion, or AU$436 billion, but the case has attracted litigants. More and more plaintiffs have joined the class action and so far the amount has reached US$600 billion in total.
JPB Liberty is seeking to raise funds for the case from venture capitalists, litigation funders and investors. Plaintiffs are expected to receive 70% of any settlement and lenders a 30% discount.
The no-win, no-fee case has been referred to lead counsel for review and is awaiting funding to file as the companies and individuals allegedly affected expect more people to join the action.
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