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Arsenal Get Second Warning From Advertising Watchdog For NFT Promotions
The ASA lambasted the club for not making it sufficiently clear that the value of investments in paid-for tokens was variable and that the crypto assets were unregulated
Uzma D.
7:13 10th Aug, 2022
NFTs

Arsenal Football Club have been given a second warning by the UK advertising watchdog over promotions for Socios non-fungible tokens (NFT).

The Advertising Standards Authority criticised the club's marketing material to club members on the $AFC fan tokens, which the club has been flogging without suitable high-risk warnings attached.

Arsenal sent emails to fans last year offering a "special gift to members", giving them "the chance to claim a FREE non-tradable $AFC Fan Token".

The tokens, which were created in partnership with Socios, were said to allow fans "voting rights on official club decisions, the opportunity to earn VIP real-life experiences, unrivalled access to digital club-related events".  

But the ASA lambasted the club for not making it sufficiently clear that the value of investments in paid-for tokens was variable and that the crypto assets were unregulated.

It said a Facebook post and website post promoting the tokens were "misleading" for this reason.

The club "trivialised investment in cryptoassets by omitting appropriate and prominent risk warnings", the ASA added.

It’s not the first time the regulator has censured the Gunners over crypto promotions, having previously banned the club’s posts on Facebook and its website that promoted the fan tokens, as they took advantage of consumers’ inexperience in crypto assets and misled consumers by not making it clear that these NFTs had to be bought using another cryptocurrency.

The North London club are by no means the only club to venture into the sometimes-dodgy world of NFTs, with Manchester City and Wolverhampton Wanderers having launched fan tokens via Socios and Bitci, while Manchester United and Watford FC have deals with Tezos and Dogecoin respectively sponsoring various parts of their kit.

Paris Saint-Germain and Juventus of Turin were two of the first teams to partner with Socios, back in 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.

While NFTs have been described as modern day trading cards, Streeter noted that they are seen by clubs as valuable streams of fresh revenue as well for soccer stars themselves, many of whom have also been promoted crypto or NFT 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’s left many hopeful fans in the stands clutching NFTs with hefty losses," said Streeter.

"ASA officials are faced with the task of running the line, assessing every complaint against companies, but with scant other regulation governing crypto assets, and so many flags springing up it’s becoming an increasingly difficult play to monitor.

"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."

Current promotions for the Socios fan tokens on the Arsenal website include a longer warning, noting that the tokens "are a form of cryptoasset" and that to get them, one not only needs to download the Socios app but also purchase the Chiliz ($CHZ) cryptocurrency and exchange this cryptocurrency for the fan tokens.

The warning also adds: "Although we only promote $AFC Fan Tokens as a tool to engage with the club, we recognise that a secondary market for trading does exist. As such, we remind you that: a) the value of cryptoassets is variable and can go down as well as up; (b) cryptoassets are unregulated in the UK; and (c) capital gains tax may be payable on any profits made on the sale of cryptoassets.

"The decision to open a cryptoasset 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 cryptoassets if you do not fully understand the nature of your purchase and the risks involved."

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