A newspaper ad for the cryptocurrency trading platform BitMEX, seen on 3 January 2019. The ad showed a graph spread across two pages. The horizontal axis was divided and labelled into six month units showing dates between January 2009 and January 2019. The vertical axis was labelled “Bitcoin Price In US Dollars” separated by decimal point value increments from $0.0001 to $100,000. The graph depicted a sudden rise in the value of Bitcoin after July 2010. The highest value recorded on the graph was of more than $10,000 between July 2017 and Jan 2018. Text at the top of the left page stated “3 January 2009. Ten years ago today, the first block of the Bitcoin blockchain referenced the front page of The Times.” Text at the top of the right page stated “3 January 2019. Turns out, that was a pretty big deal.” Text in the bottom right corner of the graph stated “Source:Blockchain.com”.
The ASA received four complaints:
1. Four complainants, who believed the ad exaggerated the return on the investment, challenged whether it was misleading.
2. Two complainants, who believed the ad failed to illustrate the risk of the investment, challenged whether it was misleading.
ResponseHDR Global Trading t/a BitMEX said the ad was produced to commemorate the 10th anniversary of the mining of the initial block on the Bitcoin blockchain on 3 January 2009, which included a footer on the front page of a national newspaper that read "Thanks Satoshi, we owe you one. Happy 10th Birthday, Bitcoin", the graph and text next to it and a full page article written by the CEO and co-founder of HDR Global Trading Arthur Hayes titled "Two sides of the coin: the bifurcated near-future of money".
BitMEX said it was a peer-to-peer crypto-products trading platform that offered leveraged contracts bought and sold in Bitcoin, that it did not buy or sell Bitcoin and that while its products indirectly exposed investors to Bitcoin price fluctuation, an investor's gains or losses were not directly dependent on rises or falls in the value of Bitcoin. They said as a crypto-trading platform BitMEX allowed investors access to crypto financial derivatives markets to facilitate their trading with each other on a peer-to-peer basis. They said it was not possible to buy or sell Bitcoin on the BitMEX platform, or transfer physical or other currencies to HDR Global Trading in exchange for Bitcoin. They said that the platform was a contracts-based exchange for the trading of derivatives.
BitMEX said that all transactions settled in Bitcoin would require an individual user to already own Bitcoin before they used the BitMEX exchange platform and that BitMEX had no direct financial interest in the value of cryptocurrency itself.
BitMEX said that it did not seek to promote any products sold by its parent company HDR Global Trading and that the ad did not relate to capability or performance of any products offered by HDR Global Trading, nor did the ad constitute an offer of a financial product for the purposes of CAP Code rule 14.1. They said that while the ad stated "advertisement" at the top of the page it was not intended as a promotion of their products but rather as a commemoration of an important landmark in the industry and that any optimism represented by the feature referred primarily to the security and technology of a system which was simultaneously stored on thousands of computers around the world, with no single entity controlling the blockchain. They said there was no suggestion that investors should be optimistic about future investment prospects of Bitcoin or any of BitMEX's trading products.
BitMEX said the purpose of the graph was to inform, not to sell, that it was not intended to present detailed data for the purposes of financial analysis and the small scale would make it difficult for it to be used for that purpose. They said the graph was not intended to advertise either Bitcoin or any of BitMEX's products.
BitMEX said that, in any case, the graph provided an appropriate and clearly labelled scale to depict the fluctuations in Bitcoin's value over the course of ten years according to reliable and factually correct data. They said that the graph did not exaggerate the benefits of a Bitcoin investment or conceal the risks associated with such an investment. They said that while cryptocurrency might experience falls in values as well as rises across a ten-year period, both were equally and accurately represented by the scale used. They said that given the overall increase in Bitcoin's value over the past ten years, the logarithmic scale of the graph significantly understated the scale of the rise in its value which appeared as modest upward growth rather than the approximately 5,200,000% growth from 18 August 2010. They said the logarithmic scale was the only sensible way of depicting such a significant increase.
BitMEX said the remainder of the ad referenced the risk involved in any investment which referred to Bitcoin in Mr Hayes' article as "still very much an experiment" and mentioned "price volatility" as an issue affecting Bitcoin. They also said it stated "the road ahead will be challenging". They said that they did not intend to republish the relevant material nor publish any ads in the UK which featured a similar logarithmic representation of the price of Bitcoin.
The ASA noted that the ad showed a graph depicting the value of bitcoin against the US dollar since January 2009. We noted that 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. 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 understood that such scales were a valid and useful way of presenting data; particularly when there was a need to show very large changes or rates of change over long time periods. However 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.
In that context we considered that readers were likely to interpret the line of the graph to mean that there had been a sharp then steady rise in bitcoin’s value in its early years up to its peak in November 2017 followed by a gentle decline in recent years. We understood, however, that bitcoin’s value had fluctuated dramatically in recent years from, for example, approximately: US $1,000 at the beginning of 2017 to US $14,000 in November of that year and then steadily back down again to US $4,000 at the time the ad was published in January 2019. For those reasons we considered that readers of the ad were likely to be misled about bitcoin’s value and stability in recent years and therefore about what any investments they might previously have made would have yielded.
In addition, we did not consider that the text alongside the graph which stated that Bitcoin was "still very much an experiment", that "the road ahead will be challenging" or "price volatility" mitigated the overwhelming impression about Bitcoin's value created by the graph. In any case the full text stated "Despite price volatility and how entirely bonkers the system seems, the Bitcoin protocol appears robust. And although the road ahead will be challenging, there's a reason to believe Bitcoin's still got a chance at glory". We considered that was a clear promotional statement of Bitcoin's merits and did very little to warn consumers of any risks. For those reasons we considered that the ad had misleadingly exaggerated the return on investment, failed to illustrate the risk of the investment and therefore concluded it was in breach of the Code.
The ad breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.11 (Exaggeration) and 14.1 (Financial products).