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By Gabriel T. Rubin 

Cryptocurrency peddlers are being let back into valuable social-media advertising space, after Facebook Inc. eased an outright ban on ads from the industry.

The tech company put a blanket ban on such ads in January, after a spike in the price of bitcoin and other cryptocurrencies led to a proliferation of new cryptocurrency products -- some legitimate, others scams. Companies including Alphabet Inc.'s Google, Twitter Inc. and Snap Inc.'s Snapchat soon followed with their own bans.

Facebook will maintain its ban on advertising initial coin offerings, which have soared in popularity recently. In an ICO, a company creates a new virtual coin or token and offers it for public sale.

Which cryptocurrency firms will get to advertise on the platform will be up to Facebook's discretion. The company didn't detail the criteria it plans to use.

"Eligibility may be subject to such conditions and restrictions as Facebook may decide," the company says on its cryptocurrency product onboarding request form.

Facebook said its initial ban on cryptocurrency ads was "intentionally broad" as it worked to "detect deceptive and misleading advertising practices." The company promised to revisit the policy once it had conducted a sweep of existing ads that violated its prohibition on financial products associated with scams.

Promotional efforts for cryptocurrencies have come under fire from federal and state regulators in recent months. In November, the Securities and Exchange Commission warned investors about the risks of celebrity-backed ICOs, and encouraged investors to "research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons."

Before the crackdown, celebrities including Paris Hilton and the retired boxer Floyd Mayweather Jr. had appeared in ads touting crypto products.

Some fraudulent ICOs shut down by regulators don't even bother to pay celebrity endorsers, or even refer to them by their names or titles when using their photos.

Texas securities regulators shut down a coin offering last month that included "client testimonials" along with photos of Prince Charles and Jennifer Aniston. Another scheme shut down by Texas regulators featured a photo of Supreme Court Justice Ruth Bader Ginsburg and former U.S. solicitors general as the ICO's purported legal team. None of these celebrities or government officials were involved in the ICOs.

An analysis by The Wall Street Journal last month found that one in five digital coin offerings shows hallmarks of fraud.

As part of its investor education efforts, the SEC even created its own fraudulent ICO website -- dubbed HoweyCoin, a tongue-in-cheek reference to a famous securities law case -- to demonstrate how easy it is to separate unwitting investors from their money with the help of urgent-sounding language and a sleek website.

People who click on the "Buy Coins Now!" link are taken to an SEC webpage that says: "If you responded to an investment offer like this, you could have been scammed -- HoweyCoins are completely fake!"

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

(END) Dow Jones Newswires

June 26, 2018 18:33 ET (22:33 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.