Video streaming site YouTube has found itself entangled in the Bitconnect scam fray, after a class-action lawsuit filed by aggrieved investors cited the platform for allegedly allowing users to be exposed to the scam’s promotional videos.
In the documents filed with the Southern District Court of Florida, Google-owned YouTube was charged with negligence in connection with its alleged failure to protect or warn its users that Bitconnect was a scam. According to reports, the scheme posted more than 70,000 hours of video content on the video sharing platform, which was viewed 58 million times.
The plaintiffs claimed that there were “varied and innumerable ways” in which Bitconnect was promoted—from press releases to Bitconnect’s website, online chat rooms or social media platforms. With YouTube, the lawsuit said pointed out that the site’s top 10 Bitconnect affiliates lured “thousands if not hundreds of thousands of victims into the Bitconnect defendants’ fraudulent investment scheme.”
“YouTube was aware, or should have been aware, that the Bitconnect defendants were using YouTube to promote the fraudulent Bitconnect Investment Programs and to recruit unsuspecting investors in the United States and abroad to purchase Bitconnect Investments,” the document reads. “YouTube breached its duties to its users… by failing to warn them of the dangers associated with investing in the fraudulent Bitconnect Investment Programs and the fraudulently-promoted Bitconnect Investments. YouTube’s negligence was a substantial factor in and proximately caused damage to plaintiffs and the class.”
The original complaint has been filed by six individuals, represented by the Silver Miller law firm. The lawsuit, according to Silver Miller, “represents all those defrauded by Bitconnect’s ‘wide-ranging Ponzi scheme.'”
The plaintiffs had stated that Bitconnect’s former $2.5 billion market capitalization was “built through the use of fraudulent means,” in particular “a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting victims into the fraud.”
With YouTube now entangled in this legal mess, the case could be used as a means for web giants like Google and Facebook to justify their current bans on crypto advertising. This is due to the fact that current advertising algorithms used by Google cannot presently distinguish between genuine projects and frauds.
After the exposure of Bitconnect scam, several prominent people also called out those Youtubers, such as Pewdiepie, who were responsible for the promotion of the Bitconnect videos. However, the saga has taken on a new twist with potentially chilling consequences for social networks that decide to share crypto advertising on their platforms if this lawsuit is accepted by the court.
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