The video site Youtube became the defendant of the Bitconnect Ponzi scheme, due to the failure to protect its users from fraudulent videos. Google and other companies may use this case to justify their ban on encrypted advertising because their algorithms cannot distinguish between legitimate items and fraudulent activities.
Is Youtube responsible for the Bitconnect case?
Public documents submitted to the Southern District of Florida show that Youtube was recently added as a defendant to a class action lawsuit against Bitconnect. According to the lawsuit, the video platform Youtube failed to protect or warn its users from the promotional materials of the Bitconnect branch, and the related promotional materials reached more than 70,000 hours of watch time and 58 million views on Youtube.
“Some affiliate promotions have established a partnership with Youtube, whereby BITCONNECT, the defendant, spread fraudulent and harmful content to unsuspecting victims worldwide. Due to YOUTUBE’s negligence, it failed to victimize harmful content. The person issued a warning.” The document claimed.
The other part writes:
“In short, in the case of Youtube’s failure to issue a warning, the defendant BITCONNECT, by using the public’s enthusiasm for investing in virtual currency, by attracting unsuspecting investors to buy unregistered securities and participate in Pyramid/Ponzi schemes, Thousands of investors have implemented fraud.”
Huge Ponzi scheme
The initial indictment was initiated by Charles Wildes, Francisco Doria, Aric Harod, Akiva Katz, James Gurry, and Ronald Nelson – presented by Silver Miller on behalf of all Bitconnect customers. The plaintiff claimed that Bitconnect’s $2.5 billion market capitalization was “established through the use of fraudulent means”, specifically “a huge Ponzi scheme, deceiving investors, mocking state and federal securities laws, and employing a number of water forces. Let more unsuspecting victims fall into fraud.”
After the incident was exposed, many well-known people on the Youtube platform accused the video owner of Youtuber of promoting Bitconnect, including Pewdiepie. These allegations are now a step further than accusing the video master, and now accuse the platform itself. If accepted by the court, this may have a chilling effect on sharing encrypted content on social networks.