Digital media giant YouTube has been named in class action lawsuit tied to the collapse of BitConnect, the cryptocurrency lending platform widely accused of fraud.
BitConnect's shutdown in January – which followed a series of warnings from U.S. investors – triggered a number of investor lawsuits, including one filed in late January in Florida. BitConnect's platform was tied to a token and in-house crypto exchange, both of which have gone defunct in the months since (once valued above $400, the token is now worth less than $0.50 apiece according to CoinMarketCap).
That lawsuit later became a consolidated class-action following a court ruling in June, coming in the wake of claims of an ongoing inquiry by the Federal Bureau of Investigation.
The lawsuit faults YouTube for negligence in not policing the content on its site – particularly promotional videos by BitConnect boosters and affiliates – more tightly. The plaintiffs wrote that, all told, the top 10 most popular BitConnect affiliates "published over 70,000 hours of unedited content, generating 58,000,000 views and luring hundreds if not hundreds of thousands of victims."
They went on to state:
"By enacting policies designed to prevent bad actors (such as those soliciting investments in fraudulent Ponzi schemes) from disseminating harmful, offensive or inappropriate content through its platform, YOUTUBE owed, by its own assumption, Plaintiffs and the Class a duty to reasonable care to prevent such content from harming its users."
YouTube, according to the lawsuit, "failed as a gatekeeper to protect its users."
Google – YouTube's parent company – notably moved in March to ban cryptocurrency ads, including those tied to initial coin offerings (ICOs). That policy went into effect last month.
In an email to CoinDesk, David Silver, founder of the Silver Miller law firm that filed the class-action suit, urged the company to "take responsibility" for its alleged role.
"The platform allowed BitConnect to reach hundreds of thousands of potential investors, all while YouTube was aware that BitConnect was a scam. As the old saying goes: Sometimes when you lie down with dogs, you get fleas," he wrote.
Google did not immediately respond to a request for comment.
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YouTube Accused of Negligence in BitConnect Fraud Lawsuit