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SOCIAL media giant X (formerly Twitter) has been hit with a hefty €5 million fine in Spain after breaking the law on advertising financial products, including cryptocurrencies.
The Spanish Securities and Exchange Commission (CNMV) announced today that it imposed the massive €5.8 million penalty for ‘a very serious and ongoing violation’ of the country’s strict financial advertising rules.
Quantum AI, a financial company without a license, had posted ads on X promoting cryptocurrencies in November 2023. The company has not been officially approved to provide financial services in Spain. It was peddling digital assets.
The CNMV stated that the social media platform did not comply with the regulations which came into effect in March 2023 and required strict oversight of the advertising for financial products. The new rules were implemented in response to the growing concern about rogue companies that target consumers online.
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According to the regulation, websites, social platforms, and digital media outlets have to make sure that ads for financial products are only from companies who are licensed and registered. Also, they must check to make sure that the advertisers aren’t on any blacklists for illegal firms.
Rodrigo Buenaventura was the president of the CNMV at the time and explained that platforms like X were under increased scrutiny to prevent ‘harmful’ and ‘misleading’ promotions of unregulated investment schemes.
This is the tip of the Iceberg. In recent months, Spanish authorities have cracked down on crypto ads that are not in line with the government’s efforts to control digital asset promotion. In the last year alone, Spain’s crackdown against illegal crypto operations has intensified. Many platforms are now under the scrutiny of regulators.
The €5 million penalty adds to the growing list of legal headaches for X since Elon Musk took control of the platform in 2022.
Critics have been warning for years that the billionaire’s lax approach to moderation of content could lead to bad actors exploiting the platform. The latest incident has raised concerns over the platform’s management of its advertising rules.
X has not yet commented publicly on the fine. However, it is clear that social media platforms in Europe are facing a higher stakes. Musk’s company is now under increased scrutiny, not just for its content, but also for the way it manages financial ads targeted at vulnerable consumers.
Spain is likely to keep a very close watch on digital platform X as regulators crack down on cryptocurrency promotion.
Spain’s crackdown against rogue crypto advertisements is part of an effort by the European Union to protect consumers from investment opportunities that could be fraudulent or misleading.
Many governments are taking steps to ensure that platforms such as X don’t turn into breeding grounds for harmful or illegal promotions.
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