In January 2018, the cryptocurrency Bitconnect collapsed, losing more than a billion dollars in market cap. In the wake of that crash, Bitconnect was referred to as a scam and a Ponzi scheme, and several investors who lost money on the coin promptly filed a class action lawsuit against it.
Now, YouTube has found itself named in that suit. The video site has been added as one of the case’s defendants, owing to the fact that it allegedly served as “an active participant in the events that give rise to Plaintiffs’ and the Class’ claims,” according to legal documents filed in the Southern District Court of Florida.
When Bitconnect rose to prominence within the cryptocurrency community, it was promoted by several notable YouTubers, including CryptoNick and Trevon James. According to the suit, YouTube’s top ten Bitconnect affiliates received more than 58 million views on videos promoting the company and its products. In the eyes of the plaintiffs, that makes YouTube partially responsible for the propagation of the Ponzi scheme. “YouTube failed to conduct a reasonably appropriate search of its databases and, instead, accepted more and more Bitconnect-related videos to be posted on it [sic] site while also accepting the financial benefits concomitant with the popularity of those damaging videos,” the court documents read.
YouTube could build a strong counterargument around one of the first bullet-points laid out in its Terms of Service. “The Service may contain links to third party websites that are not owned or controlled by YouTube. YouTube has no control over, and assumes no responsibility for, the content, privacy policies, or practices of any third party websites. In addition, YouTube will not and cannot censor or edit the content of any third-party site. By using the Service, you expressly relieve YouTube from any and all liability arising from your use of any third-party website.”
Whether or not YouTube accepts damages in this case, it will tread carefully in the cryptocurrency world from here on out. As the complaint notes, Google changed its policy in March 2018, prohibiting all crypto-related advertising on its platforms. “We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Google’s Director of Sustainable Ads Scott Spencer said at the time.