A digital token named after Elon Musk’s dog has launched a major advertising campaign on London’s public transport system, funded by a “tax” on new buyers.
Adverts with the slogan “Missed Doge? Get Floki” have appeared across Underground stations, trains and buses in the UK capital in recent weeks to drum up enthusiasm around Floki Inu coin.
The branding campaign aims to “legitimise” the coin and increase the “confidence of the average consumer” to buy, according to the group’s head of marketing, who identified himself by the alias Sabre. “You get a lot of scam artists in this game,” he said.
“These advertising campaigns will run together and will be a full out assault of the London public transportation system,” Floki Inu’s promoters said on Medium last month. The coin’s backers say they have also made agreements to advertise on billboards in downtown Los Angeles and are planning a push into countries including Japan, China and Russia.
The direct marketing of coins to the public is likely to intensify regulators’ focus on crypto ads. The UK’s Financial Conduct Authority has said it needs more powers to rein in promoters of crypto ventures, while the chair of the US Securities and Exchange Commission, Gary Gensler, has called on Congress for new tools to protect investors from “fraud, scams and abuse”.
Floki Inu can splash out on pricey advertising because — like some other ‘meme’ coins — it imposes a marketing fee of 4 per cent on buyers. That fee is used for “onboarding influencers” and “to further develop and grow the Floki ecosystem”, according to the coin’s website.
The combined value of the project’s two marketing wallets, which hold these funds, rose from near zero this summer to a peak near $3.5m worth of crypto assets in mid-September, according to Etherscan. The coin’s price has risen 1,600 per cent since late August, Coinbase data show.
Floki Inu did not respond to a Financial Times request for comment on which individuals or corporate entities are in control of the project.
There is no indication Musk has any involvement with the project, and the Tesla chief executive did not respond to a request for comment.
Transport for London, the UK government agency that operates the transport network, said it is “the client’s obligation to ensure [its ads] are compliant to run in the UK”.
“It is not TfL’s responsibility to carry out due diligence on the individual or entities themselves,” it added.
Hayley Brady, partner and head of media and digital at law firm Herbert Smith Freehills, said crypto ads on public transport would likely heighten consumer protection worries among regulators.
“These ads are colourful. They have emojis. They are targeting or could target a quite different market than traditional investments,” she said.
Most crypto ads in the UK fall under the remit of the Advertising Standards Authority, the industry self-regulatory body. A stricter system of rules for advertising investments, run by the FCA, largely does not apply to crypto because the assets are not regulated like standard investments.
Personal finance advocates have singled out that gap in treatment as a major worry. For instance, many jurisdictions maintain strict rules on advertising initial public offerings to retail investors that make ads for company listings unlikely.
Outgoing FCA chair Charles Randell last month said urgent action was needed to stop risky or fraudulent crypto schemes from luring investors — including through some social media influencers who he said “pump and dump” new coins.
The financial watchdog last week said it is “working on the suite of rules that may apply” if the UK government follows through on a proposal to extend the more rigorous rules to crypto.
The ASA has also vowed to crack down on misleading crypto marketing using its existing powers. The agency said it has not received any complaints about Floki Inu but that it would scrutinise the ads to make sure they adequately portrayed the risks of investing.
TfL said that since 2018 it has required all crypto ads to be reviewed for compliance with the ASA’s rules before they go up. It said ads must have disclaimers to say that crypto is not regulated in the UK and that money invested is at risk.
joshua.oliver@ft.com
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2021-10-27 04:00:32Z
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