The U.S. Securities and Exchange Commission took its first big swing against cryptocurrencies on Tuesday, obtaining a court order to halt and freeze the assets of an initial coin offering. Separately, social media giant Facebook announced it has banned ads for cryptocurrencies, including ICOs and bitcoin.
The one-two punch against cryptocurrencies helped to send the prices of bitcoin and ethereum further downward, as investors show concern over the viability of decentralized currencies.
The SEC’s involvement brings to an end the ICO of AriseBank, which claims it has raised $600 million of a $1 billion goal, according to CNBC. The Dallas-based bank was said to have had the largest initial coin offering ever.
The commission said that AriseBank “used social media, a celebrity endorsement, and other wide dissemination tactics to raise” its funds. The ICO was initiated without proper registration or exemption, leading the SEC to accuse the bank of ICO fraud.
The news came as Facebook also announced it has barred ads promoting cryptocurrencies. Unlike the SEC’s complaint against AriseBank, which is accused of engaging in illegal activity, Facebook’s policy applies to all cryptocurrencies — even those that are within the bounds of the law.
“Ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, or cryptocurrency,” the rule states. Examples of barred ads include “New ICO! Buy tokens at a 15% discount NOW!” and “Use your retirement funds to buy Bitcoin!”
Rob Leathern, product management director at Facebook, said the policy has been kept intentionally broad as it works to detect “deceptive and misleading” ads. The company has pledged to revisit the policy as its detection methods improve.
The success of bitcoin and other cryptocurrencies in 2017 has highlighted tremendous excitement about the concept of decentralization. For the identity space, the growth of bitcoin has generated significant interest, particularly in the blockchain technology that underpins it.
OWI Labs has detailed blockchain’s potential in a more realistic view in our whitepaper Don’t Believe the (Blockchain) Hype, which is now available to purchase.