Bitcoin and its rival virtual currencies fell on Thursday after Facebook said it was to block advertising promoting cryptocurrency products and services.
The social networking website, which reported ad revenues of $10bn in the third quarter, said that it was striving to block companies from advertising "financial products and services frequently associated with misleading or deceptive promotional practices".
As part of its new policy adverts from bitcoin and other digital currencies, exchanges and initial coin offerings (ICOs) will be barred.
Tech giants under scrutiny
The move comes as US tech industry giants have come under scrutiny for the way their services are exploited - either by outside agents or themselves to promote their own services.
Facebook has come under fire during the past year for enabling Russian propaganda, while Google was fined by the European Union last year for promoting its own services, abusing its dominance as a search engine.
In a blog on its corporate website, Facebook product management director Rob Leathern said: "Misleading or deceptive ads have no place on Facebook."
He added: "We’ve created a new policy that prohibits ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency.
“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve.”
Indeed, cryptocurrency exchanges are garnering more news exposure in the past few weeks for operating scams.
BitConnect has recently been hit with a lawsuit, accused of running a Ponzi scheme - where existing investors' gains are funded by inflows from new investors.
Meanwhile, in a classic grab-and-run operation, a short-lived crypto project called Prodeum raised $11m in an online ICO this week, before disappearning and leaving just the single word "penis" on its website's homepage.
Meanwhile, the US Commodity Futures Trading Commission in December sent subpoenas to Bitfinex, the crypto-exchange, and coin issuer Tether, demanding answers about how the tokens are linked to their backers.
Initial coin offerings
Crypto-startups managed to raise $5.6bn through legitimate ICOs last year, according to venture capital firm Fabric Ventures. But because of the popularity of bitcoin and its rivals and the massive gains that were made in the latter part of last year, the industry has attracted criminal activity.
Facebook hopes that by banning all cryptocurrency-related advertising, it will not be linked in any way to unscrupulous operations.
"This policy is part of an ongoing effort to improve the integrity and security of our ads, and to make it harder for scammers to profit from a presence on Facebook," Leathern concluded.
All the cryptocurrencies were lower on Thursday morning.
- Bitcoin fell 7.22% to $10,277
- Ethereum lost 5.19% to $1,107
- Ripple shed 8.72% to $1.22
- Litecoin slid 7.16% to $163.99