Google-owned video sharing platform YouTube has recently been added as a defendant in a class action lawsuit filed against BitConnect, a company that allegedly ran a cryptocurrency-related Ponzi scheme that “illogically promised” investors huge returns.
According to publicly available documents filed with the Southern District Court of Florida, YouTube failed to protect its users from BitConnect-promoting content, by not delisting and demonetizing videos about it.
This exposed “countless” of its users to the Ponzi scheme. Per reports, the scheme’s promoters posted over 70,000 hours of BitConnect-related content on YouTube, which received over 58 million views. Despite the attention, and the creation of videos attempting to expose BitConnect as a scam, its affiliates thrived on the platform.
The document reads:
In short, aided by YOUTUBE’s negligent failure to warn, the BITCONNECT Defendants defrauded tens of thousands of investors by capitalizing on the general public’s excitement for virtual currencies and by luring unsuspecting investors into purchasing unregistered securities and participating in pyramid/Ponzi schemes.
The claimants argue that YouTube should’ve paid attention to the promotional material being spread and monetized on its platform, and should have removed it. Instead, the Google-owned platform accepted the content.
Notably, Google itself recently moved to ban cryptocurrency-related ads, following the footsteps of other industry giants like Facebook and Twitter. Facebook has recently allowed non-ICO ads again.
The lawsuit was initially brought forth by six individuals who claim their losses with the company surpassed $770,000, represented by law firm Silver Miller. It represents all those defrauded by BitConnect’s “wide-ranging Ponzi scheme.”
Per the lawsuit, BitConnect promised users returns as high as 40 percent per month, and 1 percent compounding daily interest, leading to annual gains of about 3,000 percent. It promised these returns through investments made in a “trading bot” that allegedly never existed, as the money was used to pay back other investors.
Moreover its BitConnect Token (BCC), which was used on its lending platform and lost nearly all of its value after the organization finally collapsed, was considered be in violation of the Securities Act, making it an unregistered security.
The lawsuit doesn’t just go after BitConnect and its founders, but also after promoters who marketed the platform through social media and on Twitter to pump their gains through referral commissions. These include Glenn Arcaro, Craig Grant, Trevon Brown (known as Trevon James), and CryptoNick, identified as Nicholas Trovato.