TikTok users have viewed videos using crypto hashtags over 1.6 billion times, but a new study found that more than one-third of those videos contain misleading information.
The active user base on TikTok is primarily young people, some of whom are starting to think about managing their finances. Estimates from earlier this year showed that 70% of users were under the age of 34, making them inexperienced targets for scams and confidence games.
As crypto markets reached a high watermark in 2022, advertising contracts were cut with prestigious firms and actors. Sports clubs, franchises, and leagues made multi-year deals with exchanges hawking a wide variety of crypto products.
Though high-profile ads for digital assets are less common, the focus of crypto advertising has remained the province of Web3 influencers and tech entrepreneurs online. Nearly half of the ‘Cryptok’ creators included in the study were trying to promote their own products and private trading groups alongside misleading crypto content.
Out of 594 accounts included in the dappGambl study, only 10% included a disclaimer or warning about the risks of investing money in crypto.
This analysis comes amid attempts to force the Chinese-owned platform to divest from the US part of its company. TikTok’s CEO Shou Chew testified before the United States Congress last month in a five-hour hearing that put legislators’ skepticism of the social media site on full display.
China was once home to large portions of the cryptocurrency industry and its machinery. But the government banned crypto in 2021, leading to a seismic shift in the landscape of Bitcoin mining and other blockchain technologies.
Yet posts about cryptocurrency on TikTok continue to draw wide attention, a stark contrast with Chinese domestic policies that have deemed crypto to be a socially corrosive force. Geopolitical tensions have been on the rise between the US and China, increasing suspicions about the role of advertising to Western audiences on the platform.
Oversight of crypto advertising increases
In March, the Federal Trade Commission (FTC) ordered TikTok and seven other social media sites to report their anti-fraud advertising practices. Cryptocurrency was listed as a ‘relevant ad category’ next to other types of financial advice and health-related products.
The order comes after a Bloomberg report in December indicated that the FTC was probing “several” companies for their crypto advertising practices. A February court filing by the FTC in the Voyager bankruptcy case signaled the intent of regulators to crack down on firms that try to manipulate consumers in the cryptocurrency market.
In addition to other concerns about the crypto lender’s Chapter 11 payment plan, the FTC blocked what it deemed an attempt by Voyager to stop future litigation related to deceptive and unfair marketing practices. The company’s executives are named as defendants in a class-action lawsuit, which details tactics used to capitalize on customers’ naivete.
Dallas Mavericks owner Mark Cuban is among the executives charged in that case. He allegedly used the basketball team as a vehicle for advertising Voyager’s sale of unregulated securities, telling supporters that the now-bankrupt lender was “a perfect fit for our Mavs fans.”