Delhi High Court issues notice to SEBI on plea against Crypto Currency advertisement

The Delhi High Court on Wednesday issued notices to Centre, SEBI (Securities and Exchange Board of India) and others regarding crypto-currency advertisements. The court notice came over a plea seeking direction to take effective steps and issue appropriate guidelines/rules against Indian crypto-asset exchanges advertising on national television without adequate standardized disclaimers. The Plea stated that crypto-currencies are inherently riskier than other equity products.

Delhi High Court questions Ministry of Information and SEBI

The Division Bench of Justice DN Patel and Justice Jyoti Singh, while listening to the plea, sought responses from the Ministry of Information and Broadcasting, SEBI, and crypto assets companies like M/s Wazir X, M/s CoinDCX and M/s Coinswitch Kuber over its advertising. The court has asked the companies to release an explanation. The Delhi HC slated further hearing in the matter for August.

The Petition filed by two practising lawyers, Ayush Shukla and Vikash Kumar sought direction to SEBI to issue guidelines mandating that disclaimer text cover 80 per cent of the screen. It also demanded a voiceover be read in a slow manner and not speed-read like usual practice. The petition asked for the reading to be lasting five whole seconds, against audio-visual advertisements run by crypto-asset exchanges.

Petition to 'protect the average investor from risks'

The petition states that as M/s Wazir X, M/s CoinDCX and M/s Coinswitch Kuber are made a party in the matter as these firms that are directly involved are established crypto- exchanges currently functioning within the territory of India who runs advertisements enticing and drawing retail investors to trade, invest in cryptocurrencies and crypto-assets. The plea also stated that crypto-assets are inherently riskier than traditional equity investment products in the share market, mutual funds as well as all other forms of financial products offering investment opportunities.

The petitioners also stated in their plea that Crypto-assets must be given the same treatment as mutual funds. It claimed that the protection of the retail investors who are not aware of the inherent characteristics of crypto-assets and their risk profile must be ensured. "An ordinary retail investor who views the audio-visual advertisement on television run by the firms involved on a regular basis, as well as on online websites like Youtube, may suffer immense losses as a result,” the petition said.

IMAGE: UNSPLASH