YouTube Chided over Failure to Prioritize Client Security
Video sharing platform YouTube is under attack for its supposed failure to safeguard its more than 1.3 billion users from scrupulous videos.
YouTube has been dragged into a class action lawsuit filed against Bitconnect for failing to protect its users from Bitconnect affiliates’ promotional advertisements that reached more than 70,000 hours and 58 million views on the Google-owned video site, based on public documents filed with the Southern District Court of Florida.
“Several of the Affiliate Promoter Defendants had partnerships with YOUTUBE pursuant to which the BITCONNECT Defendants disseminated fraudulent and harmful content unsuspecting victims across the globe. YOUTUBE was negligent in failing to warn those victims of the harmful content for which YOUTUBE compensated their creators and publishers,” the document states.
“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,” it added.
Earlier, Charles Wildes, Francisco Doria, Aric Harod, Akiva Katz, James Gurry, and Ronald Nelson – represented by the law firm of Silver Miller – filed a complaint against Bitconnect on behalf of the firm’s customers in the Florida district court.
The case stipulated that the company’s market capitalization amounting to $2.5 billion was amassed through deceitful acts; specifically, “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.”
Glenn Arcaro, Trevon Brown a/k/a Trevon James, Ryan Hildreth, Craig Grant, and Cryptonick, who were alleged of employing aggressive ways to recruit new clients into the Ponzi scheme via social media sites, were named defendants.
“Bitconnect guaranteed investors up to a forty percent total return per month on their investments, following a four-tier investment system based on the sum of the initial deposit.” Investors were “promised a one percent return on investment on a daily basis, which Bitconnect purported would be generated by its own proprietary trading bot and volatility software,” that was to be paid “regardless of market performance or the fluctuating price of cryptocurrency,” the lawsuit says.
A $1,000 worth of investments would balloon to a $50 million return in three years of compounding daily interest, it added.
In the beginning of the year, Bitconnect announced its $2.5-billion market cap. But it suddenly announced the closure of its lending and exchange platform after receiving cease-and-desist orders from North Carolina and Texas authorities. The firm accounted its move to “continuous bad press” on the platform. While the company had said they would be refunding all outstanding loans at a rate of $363.62, its token was trading less than $40.
Proving whether or not YouTube is liable for the shortcoming, the industry believes the outcome of the Bitconnect trial may set a perilous precedent in the future. This may also prompt social media sites to further isolate virtual currencies and transactions related to it.