Legal proceedings are fast gaining traction several months after the infamous cryptocurrency Ponzi scheme Bitconnect was shut down in January 2018.
YouTube to Testify Against Bitconnect
In the latest development, video-streaming platform YouTube has been added as a defendant in a class action lawsuit against Bitconnect, as observed in a court filing dated July 3, 2018.
Initially filed on January 24, 2018, by the Florida-based law firm Silver Miller, the lawsuit defined Bitconnect as a fraudulent entity operating an elaborate Ponzi-scheme under the guise of a cryptocurrency firm. The six plaintiffs, represented by Miller, estimated their total losses at $771,000.
For the uninitiated, Bitconnect infamously offered its tokens in a tier-based subscription model and claimed daily returns of one percent on investor capital via their sophisticated trading algorithm.
The company was known for its elaborate exhibition and functions, alongside paying YouTube personalities to advertise their tokens – and this was precisely where the popular video streaming business went wrong, at least in the eyes of the law.
Lawsuit Questions YouTube
The lawsuit identified the lack of due diligence shown by YouTube in blocking promotional content from BitConnect.
As stated, Bitconnect videos advertised a very inappropriate and fraudulent investment scheme via its channels or affiliate marketers. This aspect was against YouTube’s terms of service, which prevents user exposure to “illegally-promoted investments” and “injurious content.”
The lawsuit claimed famous cryptocurrency YouTubers posted over 70,000 hours of promotional Bitconnect content, generating over 58 million views in the process. The videos typically showed off the lifestyles of people involved and appealed to viewers to invest in Bitconnect via affiliate links.
The document added the sheer number of views was enough for YouTube moderators to certify the content and audit it to meet “enhanced eligibility standards,” which they failed to do.
YouTube’s Failure Compared to Google’s Preventive Measures
In lieu of the points above, the lawsuit stated YouTube should have conducted a thorough search of the contents of its website, which might have mitigated fraud if it took corrective action.
The document made references to Google, which banned cryptocurrency advertisements on its platform in March 2018 after the increased risk of investor fraud from speculative tokens, noting:
“YouTube failed as a gatekeeper to protect its users from, and warn its users of, the very harm YouTube set out to prevent with its advertising protocols and proprietary algorithms.”