In a recent case in California, the founder of an online video-sharing website accused its former CEO of stealing the company. In 2009, this former CEO was appointed to take over the company after it had been purchased by Google, the tech giant who also owned YouTube. While the former CEO had no experience in the technology industry, he was able to get the job, because YouTube was required to purchase a specific amount of advertising with the company.
In the past week, a major case has broke out regarding a lawsuit filed against YouTube over claims that the video sharing platform is not doing enough to protect users from scammers trying to scam money from them.
YouTube, one of the world’s largest media platforms, has unwittingly become a haven for scammers. The growing interest in digital assets in recent years has enabled a large number of scammers to take advantage of this to exploit unsuspecting retail investors. A common type of scam is false pretenses related to high-profile individuals, as well as pump-and-dump and Ponzi schemes, among others. Here are some examples that have led to legal action.
Steve Wozniak vs. YouTube
As the co-founder of Apple, Steve Wozniak’s name has a lot of charisma. That way he found/finds the perfect person for the scammers to claim a connection – and that’s exactly what happened many times on YouTube. The scammers regularly published documents claiming that BTC was distributed and funded by Wozniak and other prominent individuals. To make matters worse, YouTube would drive a lot of traffic to these channels through targeted ads. Unfortunately for Wozniak, a 2020 lawsuit against YouTube was dismissed by a California court on the grounds that these platforms are not responsible for uploaded content. This decision was made with reference to section 230 of the Communications Decency Act. No provider or user of an interactive computer service may be considered the publisher or narrator of information provided by another information content provider. Although the judge ruled in favor of the defendants, the plaintiffs have 30 days to present new evidence to try to hold YouTube liable outside of Section 230.
SEC v. BitConnect Sponsors
In one of the biggest Ponzi scams of all time, BitConnect and its masterminds managed to cheat unsuspecting investors out of billions of dollars. A significant portion of these funds were generated by advertising campaigns on YouTube, which are now known to be fraudulent. In recent days, the SEC has announced that it has now filed formal charges against several individuals. SEC’s Lara Shalov Mehraban explains: We allege that these defendants unlawfully sold unregistered securities of digital assets by actively promoting BitConnect’s loan program to retail investors. This lawsuit was not directed at YouTube itself, but concerned the actions of individuals who abused the platform’s ability to reach large audiences. Proponents promoted the benefits of investing in BitConnect’s completion program to potential investors, including by creating testimonial videos and posting them on YouTube, sometimes several times a day.
Ripple vs. YouTube
While the aforementioned lawsuits are pending or have been dismissed, a third lawsuit was recently filed regarding similar actions by YouTube users and the outcome is different. This case, brought by Ripple and its executives against YouTube, has been settled. Like the Wozniak case, the lawsuit alleges that YouTube not only turned a blind eye to scammers offering XRP gifts, but also made a direct profit by directing traffic to the channels with targeted ads. Details of the deal are unfortunately scarce. In March 2021, Ripple CEO Brad Garlinghouse announced on Twitter. Social platforms are beginning to see the role they play in the survival of cryptocurrencies and recognize the need to be part of the solution….. Platforms need to take the lead, otherwise it’s just flashy….. While the specific terms of the settlement are confidential, it is clear to all that without accountability and action, the credibility of the industry will be weakened at a crucial time when governments around the world are showing great interest in cryptocurrencies.
While YouTube remains protected by the Communications Decency Act for now, it is clear that the platform itself and those who upload content must be held accountable. Not only are the reputations of companies like Ripple and people like Wozniak tarnished – unsuspecting investors are being driven into the fraud and then exploited. There is no easy answer, however, as freedom of expression is highly valued on platforms like YouTube – and rightly so. Right now, the SEC and its lawsuits against the developers of BitConnect may deter potential future fraudsters.