The Spanish securities regulator just announced that it is investigating the proliferation of crypto ads on X (formerly Twitter), featuring products from unlicensed providers. Spain’s watchdog alleges that the social media platform failed to exercise prudence in verifying the source of the advertisements.
Legal Action Against X
Spain’s National Stock Market Commission (CNMV) President Rodrigo Valbuena revealed that they will take legal action against X for failure of compliance in the country’s crypto ad rules.
According to Reuters, Spanish stock market regulations contain a provision that requires social platforms and communications providers to proactively prevent advertisements contracted with unlicensed entities from being distributed. As an added measure, these platforms in Spain must check first whether the customers they lend money to are listed on CNMV’s list of “pirate operators”.
Valbuena stated that it was the CMNV’s responsibility to oversee these platforms and enforce any violations of their standards. He pointed out the agency will use all available resources against those found responsible and take necessary steps against those found guilty of breaking these standards.
The CMNV head also took jab at social media companies, suggesting that they mustn’t accept even one Euro as compensation for advertisements by companies designed to make money through fraudulent or misleading tactics.
The new regulations enforced by CMNV came into enforcement in February 2022, and it particularly has its sights on campaigns targeting over 100,000 people. Furthermore, the securities regulator requires crypto ads to include warning about the risks inherent in digital asset investments.
X: Hotbed of Crypto Scams
Concerns are growing that X has become a hub for cryptocurrency scams. An artificial intelligence solution developed by San Diego State University’s Department of Computer Science revealed 95,111 giveaway schemes circulating across its platform during June alone.
Twitter Lists provide the perfect avenue for crypto giveaway scams to gather general data on potential targets, which they then use to entice unsuspecting individuals into joining the scam. An investigation conducted by SDSU revealed this dangerous web of deceit as it cost 365 victims around $872,000.
X is no stranger to controversy since its acquisition by Elon Musk. Following Musk’s takeover, allegations of US securities law violations immediately surfaced against it and Musk repeatedly declined subpoenas from regulatory bodies for testimony regarding these alleged offenses
Spain’s CNMV’s intervention adds further fuel to Musk and X’s ongoing legal battles should they fail to come to an agreement over this new issue.