Arsenal F.C have been issued a second warning from the UK advertising watchdog for advertisements for Socios tokens that are non-fungible (NFT).
The Advertising Standards Authority criticised the club's marketing materials to its members who are members of the club using Fan tokens worth $AFC, that the club has been selling with no high-risk safety warnings.
Arsenal sent fans emails last year that offered the fans a "special gift to members" They were offered "the chance to claim a FREE non-tradable $AFC Fan Token".
AFC Fan Token
The tokens, developed in collaboration with Socios They were supposed to provide fans with "voting rights on official club decisions, the opportunity to earn VIP real-life experiences, unrivalled access to digital club-related events".
However, the ASA condemned the group for not being evident that the value of investment in tokens that were paid for were variable, and that cryptocurrency assets were not subject to regulation.
It claimed that it was because a Facebook blog post and a website that promoted those tokens are "misleading" for this reason. It "trivialised investment in crypto-assets by omitting appropriate and prominent risk warnings" the ASA said.
The issue is not unique. that the regulator has slapped the Gunners for crypto-related promotions prior to that, and had previously banned posts on Facebook as well as its website which promoted fan tokens since they exploited the inexperience of consumers with cryptocurrency and misled people by not clearly stating that NFTs were required to be purchased with a different cryptocurrency.
It is worth noting that the North London club are by not the only club to explore the sometimes confusing world of NFTs and NFTs, such as Manchester City and Wolverhampton Wanderers have launched fan tokens through Socios and Bitci. Manchester United and Watford FC have agreements that include Tezos and Dogecoin and sponsor various components of their kits.
Paris Saint-Germain and Juventus of Turin were among the first teams to join forces with Socios in the year 2018.
"The ASA is wearing the referee shirt in the high stakes game of crypto trading and has once again shown the red card to Arsenal football club for flogging tokens without high risk warnings attached," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
NFTs have been called modern day trading cards. Streeter pointed out that NFTs are considered by clubs to be beneficial sources of income, as well as for soccer players themselves, who are also promoting NFT or crypto schemes.
"With the value of crypto coins and tokens crashing in spectacular fashion in the last few months, as a wave of anxiety gripped financial markets, it left many hopeful fans in the stands clutching NFTs with hefty losses," said Streeter.
"ASA officials are confronted with the challenge of running the gauntlet, reviewing every claim against businesses and lagging behind in other regulations for crypto assets and a myriad of red flags popping up, it's becoming a more difficult task to keep track of.
"This ruling is another stark reminder that people should resist ploughing money into schemes they don't fully understand and should only speculate with money they can afford to lose. It also highlights the need to speed up the plan to give the city watchdog - the Financial Conduct Authority more powers to regulate the crypto industry, given the government's vision to make the UK a crypto hub."
There are currently promotions on the Socios fan tokens available on the Arsenal website come with a more detailed warning that states that the Socios fan tokens "are a form of crypto-asset" and to acquire the tokens, one not only requires downloading the Socios app, but also to purchase an account with the Chiliz ($CHZ) currency and then exchange it to fan tokens.
The notice also states: "Although we only promote the $AFC Fan Tokens as a way to interact with the club, we acknowledge that there is a secondary market for trading in place. Therefore we remind you that (a) The value and worth of crypto-assets fluctuates and may fluctuate between up (b) cryptocurrency assets are not regulated in the UK as well as (c) the capital gain tax is due on profits earned through the sale of crypto-assets.
"The decision to open a crypto-asset exchange account on the Socios.com app and purchase $CHZ and/or $AFC fan tokens requires careful thought and consideration. We advise you to spend only what you can afford to lose, and always seek independent financial advice if you are in doubt. You should not purchase any crypto-assets if you do not fully understand the nature of your purchase and the risks involved."