Facebook ban on bitcoin ads latest in very bad day for cryptocurrencies

Finance


A slew of negative reports hit the cryptocurrency world Tuesday.

Facebook announced a ban on advertisements for “binary options, initial coin offerings and cryptocurrency.” The blanket decision is part of the social media giant’s efforts to prohibit ads for financial products and services “that are frequently associated with misleading or deceptive promotional practices.”

The news followed a Bloomberg report, citing a source, that last week the U.S. Commodity Futures and Trading Commission subpoenaed Bitfinex, one of the largest cryptocurrency exchanges in the world, and a digital coin company called Tether that is run by many of the same people as the exchange. The CFTC and a representative for the companies did not immediately respond to a CNBC request for comment.

Also on Tuesday, the U.S. Securities and Exchange Commission announced that a court approved an emergency asset freeze for AriseBank, which claimed it raised $600 million in sales of new digital coins. Two websites for the Dallas-based firm were unavailable Tuesday morning, and its lawyers couldn’t immediately be reached for comment.

Bitcoin tumbled 12 percent to a low near $9,810 on CoinDesk before recovering slightly, and all major cryptocurrencies sold off.

The headlines hit as U.S. stocks tumbled for a second straight day amid a jump in Treasury yields. Some market analysts have attributed the cryptocurrency mania to the generally positive sentiment generated by stock market gains — the S&P 500 is in its second-longest bull market ever, a period without a drop of more than 20 percent from a recent high.

Worries about regulation persist in east Asia, a major market for cryptocurrencies. South Korea’s Financial Service Commission is trying to limit speculation. It confirmed Tuesday, South Korean time, to CNBC that new measures, such as bans on anonymous trading accounts, had been implemented.

In Japan, regulators are still trying to handle the fallout from a Friday hack on a major local exchange called Coincheck, which lost the equivalent of more than $500 million. Coincheck said the stolen NEM coins were held in storage linked to the internet, making it easier for hackers to steal the cryptocurrency.

Alex Sunnarborg, founding partner of Tetras Capital, noted the hack likely “spooked the market a bit, and especially among those with balances on exchanges, leading to the recent selling and drop in prices across crypto assets.”

Despite Tuesday’s slew of worrying headlines, bitcoin has survived worse over the years. It recovered from a more than $2,000 drop in September following China’s cryptocurrency crackdown and has bounced back from several other plunges of more than 20 percent.

“Because of the growth of the industry last year, there are some cracks in the industry as well that are being quickly ironed out,” said Joe DiPasquale, founder and CEO of BitBull Capital, a cryptofund that invests in other cryptofunds.

He said hedge-fund managers he spoke with “are pretty encouraged now for the defining of a new bottom for bitcoin around $10,000. It’s a support level that can be moved up from. The other things are growing pains for the industry.”



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