The U.S. Federal Trade Commission acknowledged on Monday it has opened a probe into several, unnamed crypto firms over potentially deceptive advertising. The inquiry, first reported by Bloomberg, could now implicate the ad industry and add it to the growing list of parties that may have exploited consumer trust in the crypto space—a major factor that enabled the collapse of FTX last month. 

“While we can’t comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets,” an FTC spokesperson told Ad Age.

With its sights trained on advertising practices, the probe may spell particular trouble for ad agencies, which have been the primary partners helping crypto firms navigate the world of marketing through sponsorships, billboards, TV spots and digital activations. 

The ties between crypto firms and ad agencies run deep. Dentsu Creative had long worked with FTX before its implosion, and Accenture Song worked with Coinbase to develop its award-winning Super Bowl spot—despite Coinbase’s CEO withholding credit. Further, both Wieden+Kennedy and Pereira O’Dell have teamed with Crypto.com on previous campaigns, and just last month, 72andSunny collaborated with Binance on a global marketing push. None of these agencies immediately responded to Ad Age’s requests for comment.

The responsibility that agencies share with the firms they promote will likely be a core consideration in the FTC’s probe. Lartease Tiffith, executive VP of public policy at the Interactive Advertising Bureau, doesn’t think agencies should be held accountable if their partners are independently misbehaving, as long as the malpractice is covert.

“They’re not in the operations of the business … they’re at an arm’s length when it comes to the client that they’re working for,” Tiffith said. 

But there is some precedent for ad agencies being held accountable for brands' marketing practices. In 2017, the FTC filed charges against now-defunct marketing company Synergixx after it created radio ads for dietary supplements. The ads were deemed deceptive for not disclosing the complexity of relevant tasks, as well as featuring spokespeople who actually had no expertise in the subject. 

Even though most crypto firms are not currently being accused of fraud, it may behoove their agency partners to come clean about the roles they played, said Timur Yarnall, co-founder and CEO of martech company Neutronian. Doing so could indicate good faith to the FTC as it investigates, while also taking a stab at the heart of the issue: enhancing consumer trust. 

“Agencies that want to stay in the crypto game are going to realize they need to treat [partners] as [financial products], and obviously deal with all the liability they can,” Yarnall said.

Government crackdowns heating up

Government crackdowns on the ad industry’s relationship with crypto has been building for some time. At the end of last year, the Advertising Standards Authority—a U.K. watchdog group—banned several crypto ads for “irresponsibly taking advantage of consumers’ inexperience and for failing to illustrate the risk of the investment.”

The ban affected ads from Coinbase and fellow exchange eToro, as well as those from other crypto companies. Pizza chain Papa John’s was even roped into the censure over an ad it posted for a Bitcoin promotion, which reportedly “trivialized” the serious nature of cryptocurrency investing.

In the U.S., the Securities and Exchange Commission has typically been the agency to exert force over crypto advertising. The body in June released a campaign aimed to warn investors about celebrities shilling cryptocurrencies—a practice that reached a fever pitch during this year’s Super Bowl.

The SEC’s biggest crackdown on celebrity crypto marketing came a few months later when it fined Kim Kardashian $1.26 million for promoting a token without disclosing her compensation for the effort. The case mirrored fines that the SEC handed out in 2018 to boxer Floyd Mayweather and music producer DJ Khaled, both of whom were said to have improperly shilled crypto coins.

Just how far the SEC is willing to go to protect investors remains unclear. Critics have blamed the agency and its chair, Gary Gensler, for spending too much energy on cases involving big names but small blast radii such as that of Kim Kardashian, as opposed to problems including FTX’s alleged fraud, which could directly impact up to 1 million investors.

As governments sharpen their focus on regulating the crypto industry, advertising may be stuck in the crosshairs. A class-action lawsuit recently filed in the aftermath of FTX demonstrates this: Not only was CEO Sam Bankman-Fried blamed for misleading investors, but so too were celebrity marketing ambassadors including Tom Brady, Steph Curry and Gisele Bundchen.

“Part of the scheme employed by the FTX entities involved utilizing some of the biggest names in sports and entertainment,” the complaint said. “Moreover, none of these defendants performed any due diligence prior to marketing these FTX products to the public.”