A recent study has unveiled a concerning trend on TikTok, revealing that more than one-third of videos featuring crypto-related hashtags contain misleading or inaccurate information.
TikTok has evolved beyond a mere social app and has become a platform for knowledge, learning, and life hacks. The #LearnOnTikTok hashtag has already amassed over 492 billion views, with users seeking more than just entertainment.
The popular platform’s user base primarily consists of individuals aged 34 or younger, making them vulnerable targets for cryptocurrency scams and fraudulent schemes.
The crypto market witnessed a peak in interest during 2022, leading to an influx of high-profile advertising efforts involving renowned firms, celebrities, and sports organizations.
As large-scale digital asset advertisements have decreased, crypto promotion has shifted its focus to Web3 influencers and tech entrepreneurs.
The study, conducted by dappGambl, analyzed 1,161 videos from well-known crypto influencers on TikTok and discovered that nearly half of the TikTok creators—known as “Cryptok” creators—were endorsing their own products and private trading groups while sharing deceptive crypto content.
Also the videos lacked a disclaimer and urged individuals to invest in specific coins or assets, or implied guaranteed returns. The research found that 37% of the videos analyzed were misleading, with over 189 million total views.
Despite the prevalence of misleading content, only 10% of the analyzed profiles or videos featured a disclaimer or warning about investing in cryptocurrency.
The study also found that 35% of the misleading videos mentioned Bitcoin, with a total of 53 different cryptocurrencies mentioned in all flagged videos, showcasing a range of trades and investment advice.
The prevalence of misleading crypto content on TikTok has raised regulatory eyebrows, with TikTok CEO Shou Chew testifying before the United States Congress last month.
Although China has imposed a stringent ban on cryptocurrency, the China-owned platform continues to showcase posts about digital currencies, exacerbating geopolitical tensions between the US and China.
To address these concerns, the Federal Trade Commission (FTC) has directed TikTok and seven other social media platforms to disclose their anti-fraud advertising practices.
The commission specifically listed cryptocurrency as a relevant ad category, alongside other financial advice and health-related products.
The FTC’s decision follows a Bloomberg report that disclosed the commission’s investigation into several companies for their crypto advertising practices.
In February, the FTC submitted a court document in the Voyager bankruptcy case, demonstrating its intent to target firms that exploit consumers in the cryptocurrency market.
The Voyager case also involves Dallas Mavericks owner Mark Cuban, who faces accusations of using his basketball team to promote the sale of unregulated securities by the now-defunct lender.
As more deceptive and unfair marketing practices come to light, regulators are expected to intensify their scrutiny of crypto advertising on popular social media platforms like TikTok.
