Blockchain company Ripple and its CEO Brad Garlinghouse accuse YouTube of allowing “scams” that promise free XRP, resulting in financial damage to users and damage to Ripple’s reputation.
On Tuesday, April 21, 2020, Ripple officially filed a lawsuit against YouTube in the Northern District of California after a series of fraudulent videos promising free XRP were not removed from the platform.
We all know already have heard about the platform Ripple, which is also a currency. Actually, the Ripple platform is an open source protocol which is designed to allow fast and cheap transactions. It was founded in 2012 by OpenCoin, a company that has since been renamed Ripple, and a blockchain-type network. The platform has its own currency (XRP) but also allows everybody to use the platform to create their own via RippleNet. One of the main objectives of the XRP ripple is to simplify cross-currency transactions, for example by eventually replacing the Swift system, a slow and costly protocol that banks use today to exchange currencies among themselves and/or for foreign transfers.
Enough with scams
The giveaway scams have been a problem for those involved in the crypto-community since the last big Bull Run in late 2017 and in 2018; it has become an epidemic that has gradually taken over Twitter and eventually the entire crypto-currency and blockchain space.
This epidemic has wreaked havoc on social networks, especially Twitter, over the last three years. The scammers incite their victims to send a certain number of crypto-currency on a wallet in order to receive a larger amount in return, except that they never receive anything.
Some of the accounts used by the scammers, several of which had hundreds of thousands of subscribers, were also allegedly stolen from other youtubers and then renamed to Ripple to make it easier to convince victims thanks to the large number of followers.
In January 2018, Ethereum co-founder Vitalik Buterin also seized Twitter in order to warn users that clever individuals were posing as him and sending spam to cryptocurrency enthusiasts asking them to send small amounts of Ethereum.
It is now 2020 and Ripple CEO Brad Garlinghouse is suing the US District Court of Northern California for the same reason. It was the CEO himself who shared information about the lawsuit on Twitter, along with a 22-page document detailing the lack of action by YouTube:
“Today, Ripple and I personally are taking legal action against YouTube because their platform is the epicenter for imposter scams, and they’ve done next to nothing in response to our constant takedown requests.” He added:
“Across the industry, social media companies have failed to police their platforms from being abused by the entirely preventable imposter giveaway scams. Hundreds of people (including some of you) have been hurt, yet big tech continues to drag their feet”.
Previous warnings with no return?
Ripple claims that the scammers have stolen millions of XRPs, with an estimated value of hundreds of thousands of dollars. While the exact amount of XRP stolen is difficult to estimate, one victim is reported to have lost nearly $15,000 worth of XRP alone.
To rub salt to the wound, Youtube was reportedly warned about 20 times before this lawsuit. It turns out that the company had already contacted YouTube several times in the past and had requested the termination or deletion of more than 25 different accounts. However, the platform had not reacted appropriately, quickly and thoroughly.
Garlinghouse is therefore demanding that the platform take tougher measures, react more quickly and improve the monitoring of these scams. According to Garlinghouse, no satisfactory results have been achieved to date, so Ripple has been forced to take legal action.
Among the allegations, Ripple says that aside from not taking sufficient action to permanently end the scams on their platforms, YouTube helps the scammers run ads and profit from the revenue.
“YouTube, after it was informed about the Scam on countless occasions, sold and helped the scammers disseminate advertisements-so-called “video discovery ads”-to get more YouTube visitors to view and click on videos perpetuating the Scam.”
Unfortunately, Ripple isn’t the only company in the crypto industry affected by these scams. As mentioned above, it became an epidemic for example last January, it was the French manufacturer of hardware wallets Ledger that experienced similar attacks in every way.
The lawsuit demands legal and disciplinary compensation for the damages caused, as well as compensation for any gains made by YouTube during the period when the scams were active.
Will this lawsuit make things better? Let’s wait and see…
Written by Laetisia Harson, Project Manager at Magna Numeris