Crypto-derivatives trading platform BitMEX published misleading advertising in a leading UK newspaper with a graph showing exaggerated returns from investing in Bitcoin.
Consumer watchdog the Advertising Standards Authority (ASA) ordered the exchange not to publish the ad again – and to make sure future financial claims were laid out in a way that could be readily understood and that investment risks are clearly stated.
The censure follows four complaints challenging the return on Bitcoin investment shown in the ad and two more claiming BitMEX failed to explain investment risks adequately.
The ASA upheld the complaints after an investigation.
The key issue was a graph published in the ad showing the value of Bitcoin against the US Dollar since January 2009.
“The graph used a logarithmic scale on its y-axis which meant that the equally spaced values on that scale did not increase by the same amount each time and instead increased by orders of magnitude,” said the ASA.
“In practice this meant that the y-axis of the graph increased incrementally by the power of ten. For example, after zero the scale went to 1, then 10, then 1000, up to 100,000, unlike an arithmetic scale which would increase by the same amount each time (100, 200, 300 etc.).
“This meant that the space at the top of the graph between 10,000 and 100,000 represented a change of $90,000 whereas the same space further down the graph represented only fractions of one dollar.
“We considered that at least some specialist knowledge of that type of scale would be needed to interpret the graph and that, in the absence of clear explanatory information, the graph was unlikely to be familiar or readily understandable to the national newspaper audience to whom the ad was directed.”
Not an ad, says exchange
BitMEX argued that the publication was not an advert or promotion but a commemoration of a milestone in the history of Bitcoin, so should not be covered by advertising regulations.
The ASA felt the ad promoted the merits of investing in Bitcoin and breached the UK advertising code.
BitMEX is an online trading platform for Bitcoin derivatives.
Derivatives are contracts to buy/sell Bitcoin for an agreed fixed price on an agreed date.
For example, a trader has Bitcoin worth $9,000. Another trader agrees to buy the Bitcoin for $9,000 in a week’s time. If the price has increased, the buyer makes a profit, but if it decreases, the seller has a gain.