Facebook bans cryptocurrency ads due to frequent fraud

Those cryptocurrency ads that promise to make you rich in a matter of days? You won't see them on Facebook any more.

The company added a new advertising policy Tuesday, prohibiting ads promoting "financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings, or cryptocurrency."

SEE ALSO: Bananacoin, Titcoin, and Trumpcoin: These are the craziest cryptocurrencies out there

Facebook lists four examples of such ads, and three of them have to do with cryptocurrencies.

Credit: Facebook

While there are definitely legitimate cryptocurrency-related products and ICOs (inital coin offerings) out there, it's true that many are borderline -- if not entirely -- fraudulent. My personal Facebook feed has lately been swarming with ads promoting ICOs and promising impossibly high returns, which should ring an alarm bell for any potential investor.

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The wording could be key here. While financial products and services are banned, cryptocurrency conferences, meetings, and gatherings might still be OK.

"This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve," Rob Leathern, Product Management Director, said in a statement accompanying the announcement.

This is another blow for the booming but troubled cryptocurrency space, which these days appears to be equal parts exuberance over technological innovation and just plain criminal activity.

The warnings are mounting, and they're getting increasingly serious. China banned cryptocurrency trading in the country in September. Last December, SEC Chairman Jay Clayton warned potential investors how dangerous the unregulated world if ICOs can be. And today, South Korea has implemented new, more stringent rules for cryptocurrencies, effectively banning anonymous trading.

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH. 

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