70% of Crypto Asset Public Communications Found in Violation by FINRA
2 min read
70% of Crypto Asset Public Communications Found in Violation by FINRA
In a recent report, the Financial Industry Regulatory Authority (FINRA) disclosed that approximately 70% of the crypto-related communications it reviewed contained misleading or false claims, violating guidelines on public communications. The review, which began in November 2022, analyzed over 500 retail communications related to crypto assets. FINRA identified more than 70% of the communications as having potential substantive violations of its rules on public communications.
Ira Gluck, the senior director at FINRA, emphasized the need for clear descriptions of risks and features in crypto-related communications, highlighting the increased potential harm caused by problematic communication in the growing crypto market. These communications can range from podcasts to advertisements during the Super Bowl. The violations discovered by FINRA included misleading claims about cryptocurrencies and misrepresentation of the application of federal securities laws to digital assets.
The regulator provided crypto firms with a set of questions to consider while crafting their public communications as part of its targeted exam. This move came after the collapse of FTX, a prominent crypto exchange, in November 2022. FTX had conducted an extensive marketing campaign, involving celebrity endorsements, sponsorship of sports venues, and media appearances by its former CEO, Sam Bankman-Fried. The review of crypto-related public communications by FINRA is part of its role as a non-governmental regulator overseeing investor protection.
FINRA has collaborated with the Securities and Exchange Commission (SEC) in approving broker-dealer licenses for crypto firms, while also penalizing those that have violated guidelines. As the interest in crypto assets continues to grow, regulatory bodies like FINRA are increasingly focused on maintaining transparency and protecting investors from misleading or false claims made in the crypto market.
The collaboration between FINRA and the SEC in licensing crypto firms is a step in the right direction, but it’s clear that there are still many bad actors in the industry. More needs to be done to weed them out and protect investors. 😒
It’s frustrating to see that even reputable crypto firms are engaging in misleading marketing tactics. We need stronger regulations to protect investors from these deceptive practices.
This report just confirms my skepticism about the crypto market. I’ll stick to traditional investments where there are rules and regulations in place to protect investors.
Misrepresentation of federal securities laws is a major concern. Thank you, FINRA, for identifying these violations and raising awareness about the potential risks associated with digital assets!
The collapse of FTX and the misleading marketing campaign surrounding it is a prime example of why we need stronger regulation in the crypto industry. Investors deserve better than this. 😔
Misleading claims can cause significant harm to the growing crypto market. It’s crucial to have clear descriptions of risks and features in these communications. Kudos to Ira Gluck and FINRA for emphasizing this point! 📢💼💡
Providing a set of questions for crypto firms to consider is a fantastic move. It encourages them to carefully craft their public communications and ensures that investors receive accurate information. Great initiative, FINRA!
Ira Gluck’s emphasis on clear descriptions of risks and features in crypto communications is long overdue. It’s about time that the industry starts taking responsibility for the potentially harmful effects of misleading information.
The fact that misleading claims about cryptocurrencies and misrepresentation of federal securities laws are so prevalent in the crypto industry is deeply concerning. How can we trust anything we hear or read?