Football giant Arsenal warned by UK watchdog over ‘irresponsible’ fan token ads
One of England’s biggest football clubs is in dispute with the country’s advertising watchdog over “irresponsible” fan token ads. Arsenal has been advertising its fan tokens, but the Advertising Standards Authority (ASA) says in doing so, it took advantage of its fans’ limited knowledge of digital currencies.
Fan tokens are becoming very popular, with some of the world’s biggest sporting brands selling tens of millions of dollars of these club-specific digital currencies. And while they are tied to and issued by the clubs, they are just like any other token that can be sold and bought on the open market. This makes them just as exposed to price fluctuations as any other token.
The ASA has cracked down on Arsenal for its $AFC token ads. The club, which has won the English Premier League 13 times, has been advertising the fan token on its web page and social media accounts. The token reportedly entitles its holders to “certain voting rights on official club decisions and the opportunity to earn real-life and digital club-related benefits and experiences.”
However, according to the ASA, these ads broke the advertising rules by failing to illustrate the risk of the investment. They “took advantage of consumers’ inexperience or credulity and trivialised investment in crypto-assets” and “must not appear again in the form complained about,” the agency ruled.
Arsenal has challenged the ruling and said it will be seeking an independent review of the ASA’s verdict.
Speaking to BBC, an Arsenal spokesperson said that the North London-based club takes its responsibility with regard to marketing to its fans very seriously.
“We carefully considered the communications to fans regarding our promotions and provided information regarding financial risks,” the spokesperson added.
On misleading the fans about the risk associated with digital currencies, the club argued that its website included a warning to the fans that they “could lose some or all of their money invested.” Since the ASA ruling, Arsenal has updated its web page to include a lengthy explanation of the $AFC token and the risk it carries.
“We advise you to spend only what you can afford and seek independent financial advice. […]You should not purchase any cryptoassets if you do not fully understand the nature of your investment and the risks involved,” the amended page now states.
Fan tokens are now worth over $350 million, according to data from Socios, a blockchain project that dominates this sector. Socios allows clubs to mint and sell their fan tokens easily. For the fans, they have to first convert their fiat currencies to Chilliz, the native token of the Socios platform, for them to participate in the fan token mania.
“We welcome Arsenal’s call for an independent review. This is a fast-moving area and clarity is needed to ensure all companies can adhere to the latest guidelines,” Socios said following the ASA’s warning to Arsenal.
So far, 24 clubs across some of Europe’s largest football leagues have minted and are now selling fan tokens. The biggest sale has been by Italian club Lazio, with Manchester City, Inter Milan, Trabzonspor, Porto and Santos also ranking highly.
The club tokens appeal to their fans who purchase these tokens as a sign of their loyalty to the club. These tokens also allow them to vote on some club decisions. However, the clubs only limit these decisions to minor non-consequential issues, like which song should be played as players walk on/off the pitch.
While posing as club-specific digital coins for the fans, these tokens are just a new way of selling digital currencies. They are not limited to the fans, and on many occasions, they end up in the hands of the speculators. And since the people trading them are few, they are much more volatile than the mainstream digital currencies. Even worse, clubs end up holding about 80% of the token supply and are free to sell at will.
“Fan tokens are being traded more actively than you’d expect for this type of fan-engagement product,” David Canellis, the director of news at digital currency research firm Protos notes. “Generally, small crypto-currencies like these fan tokens can be incredibly volatile due to the small amount of people who want to trade them. Speculators know this, so I would consider much of the trade in fan-token markets to be powered purely by speculators seeking short-term profits,” he said.
Watch: CoinGeek New York panel, eSports & Blockchain: The Next Level of Professional Gaming
Source: Read Full Article