A post on Arsenal’s Facebook page invited fans to vote for a song – but to do so they had to download the Socios app to get a token and vote.

Arsenal’s website included a web page published on 6 August 2021 with the title “$AFC Fan Token: Everything you need to know” and included information explaining what the Arsenal Fan Token was and the benefits that it offered. The ad explained that to buy $AFC fan tokens, purchasers needed to purchase the cryptocurrency Chiliz.

The advertising watchdog said the football club had “failed to illustrate the risk of the investment” and said the promotions were irresponsible because they “took advantage of consumers’ inexperience or credulity and trivialised investment in cryptoassets”.

The ASA also ruled that the ads were misleading because they didn’t make clear the “token” was a cryptoasset, which could only be obtained by opening an account and exchanging with another cryptocurrency which had to be purchased.

Responding to the ASA, Arsenal said the ads didn’t promote Fan Tokens as cryptocurrency investments or as a way to make money, but as a way to participate in decisions about the club.

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But the ASA ruled against the football club, stating: “We told Arsenal Football Club PLC to ensure that their future ads did not trivialise investment in cryptoassets and did not irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that CGT could be due on cryptoasset profits.

“We told them to ensure that they made sufficiently clear that the value of investments in cryptoassets was variable and cryptoassets were unregulated. We also told them to ensure that they did not mislead consumers by omitting material information in their ads, including that Fan Tokens were a cryptoasset that had to be bought using another cryptocurrency.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “NFTs which have been described as modern day trading cards are seen as valuable streams of fresh revenue for football clubs. Some individual non-fungible tokens have sold for millions of dollars, as a bubble of speculation has blown up in the crypto Wild West, and the art, music and gaming industries have scrambled to start playing the game.

“The ambition for high returns is huge. Take the group of US crypto fans who have expressed interest in buying Bradford City Football club believing that by selling these digital tokens to fans, revenues from sales will enable them to outspend opponents in pursuit of promotion. But fans should think very carefully before parting with their money, as cryptoassets are very complex, are difficult to value and are highly volatile.

“Ethereum, the blockchain network upon which many NFTs are spawned and where they are traded in marketplaces, has seen its value fall by 13% since the start of December. The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra-cheap money. As speculation swirls about how rapidly central banks will keep tightening mass bond buying programmes and raising interest rates, given soaring inflation, they are likely to stay volatile.

“There is a risk that the initial frenzy of interest in many of today’s NFTs will wane, and the assets could end up being almost worthless, in the same way as once sought after CDs, vinyl or even popular football players have ended up in the bargain bin.”