As one of the worlds largest media platforms, YouTube has unwittingly become a haven for scam artists. With an uptick in interest surrounding digital assets over the past few years, many of these scams have leveraged this to take advantage of unsuspecting retail investors.
While a common scam involves falsely feigning associations with high-profile individuals, they extend to include ‘pump & dumps’, Ponzi-scheme promotions, and more. The following are a few examples of these which have resulted in lawsuits.
Steve Wozniak vs. YouTube
As a cofounder of Apple, the name Steve Wozniak carries a significant amount of clout with it. As such, he found/finds himself as an ideal person for scammers to claim association with – which is exactly what has occurred many times on YouTube.
Scam artists would routinely post content claiming BTC giveaways funded by Wozniak and other high-profile individuals. Making matters worse, YouTube would allegedly funnel large amounts of traffic to these channels through targeted advertisements.
Unfortunately for Wozniak, a lawsuit filed against YouTube in 2020 has now been dismissed by California courts on the grounds that such platforms are not responsible for uploaded content. This decision was made, referencing ‘Section 230 of the Communications Decency Act’.
‘No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider’
While the courts have decided to rule in favour of the defendant, the plaintiffs do have a 30-day period to bring forth new evidence in an effort to hold YouTube accountable outside of Section 230.
SEC vs. BitConnect Promoters
In what was one of the largest Ponzi-schemes of all time, BitConnect and its promoters were able to bilk unsuspecting investors out of billions. A good portion of these funds were generated through promotional campaigns run through YouTube, which are now known to be scams.
In recent days, the SEC announced that it has now formally charged various individuals. Lara Shalov Mehraban of the SEC states, “We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors.”
While this lawsuit was not levied against YouTube itself, it is structured around the actions of those individuals which took advantage of the platforms capability to reach a broad audience.
“The promoters advertised the merits of investing in BitConnect’s ending program to prospective investors, including by creating “testimonial” style videos and publishing them on YouTube, sometimes multiple times a day.”
Ripple vs. YouTube
While the aforementioned lawsuits are either ongoing, or dismissed, there was recently a third involving similar actions by YouTube users with a different outcome. This case, which was levied against YouTube by Ripple and its key executives, was settled.
Much like the case involving Wozniak, the lawsuit alleged that YouTube not only turned a blind-eye to the actions of scammers touting ‘XRP giveaways’, but that the platform directly profited by funneling traffic to the channels with targeted advertisements.
Unfortunately, details of the settlement are scarce. Announced via twitter in March of 2021, Ripple CEO Brad Garlinghouse had the following to say.
“Social platforms are starting to acknowledge their role in allowing crypto scams to persist and recognize the need to be part of the solution…platforms need to lead the charge or it’s still just whack-a-mole…While specific settlement terms are confidential here, it’s clear to all that without accountability and action, trust erodes in this industry, at a crucial time when govts around the world are looking closely at crypto.”
While YouTube may be able to find safety behind the Communications Decency Act for the time being, it is clear that a means of accountability needs to be achieved for either the platform itself or its content uploaders. It is not only the reputations of companies like Ripple, and individuals like Wozniak that are being tarnished – unsuspecting investors are being driven towards scams and subsequently taken advantage of.
There is no simple answer though, as free speech on platforms like YouTube is prized – and rightfully so. For the time being, the SEC and its targeting of BitConnect promoters may strike fear into future would-be scammers.