Screenshot of Ripple Inc. page in YouTube.Ripple Labs Sues YouTube for Enabling Cryptocurrency Scam
Ripple Labs' Boies Schiller Flexner lawyers asserted that YouTube's "deliberate and inexplicable failure" to address a scam claiming to give away the company's XRP cryptocurrency has cost victims hundreds of thousands of dollars and created confusion in the digital asset market.
April 21, 2020 at 03:33 PM
3 minute read
Financial tech company Ripple Labs Inc. and its CEO sued YouTube for trademark infringement over failing to shut down a cryptocurrency scam on its platform.
In a complaint filed Tuesday in the U.S. District Court for the Northern District of California, Ripple's Boies Schiller Flexner attorneys asserted that YouTube had committed a "deliberate and inexplicable failure" to address a scam claiming to give away Ripple's XRP cryptocurrency. The suit asserts that the scam, which uses CEO Bradley Garlinghouse's likeness to spear phish users, has "defrauded victims out of millions of XRP valued at hundreds of thousands of dollars."
"The scam has also irreparably harmed Ripple's brand and Mr. Garlinghouse's reputation," wrote Boies Schiller's Damien Marshall, Mark Mao, Matthew Chou and Menno Goedman. "By infringing on Ripple's protected trademarks and misappropriating Mr. Garlinghouse's image and likeness, the scam fosters the false belief that Ripple and Mr. Garlinghouse are somehow associated with or to blame for the scam (they are not), and introduces profound uncertainty and confusion into the broader digital asset market."
The scam, which has been replicated by numerous bad actors, often targets the accounts of popular YouTubers with thousands of subscribers, according to the complaint. Once hackers have the credentials to YouTubers' accounts, they strip the content and often replace it with profile pictures and thumbnails of Garlinghouse's likeness. In the description of publicly available videos related to Ripple and XRP, the company's cryptocurrency, the bad actors direct viewers to send up to 1 million XRP to a virtual wallet in exchange for up to 500 million XRP in return.
A YouTube spokesperson said, "We take abuse of our platform seriously and take action quickly when we detect violations of our policies, such as scams or impersonation."
Ripple contends that YouTube refuses to stop the scam even after Ripple has issued 49 takedown requests to address accounts directly linked to the fraud and 305 requests to address accounts that were infringing on its brand and Garlinghouse's likeness. The complaint also alleged that on several occasions YouTube did take action but waited between three weeks and two months to do so.
Besides YouTube's "willful inaction" and generation of ad revenue from the videos, the complaint alleges that YouTube also verified one of the accounts perpetuating the scheme.
"By awarding a 'verification badge' to a hacked channel that was impersonating plaintiffs in furtherance of the scam, YouTube communicated to hundreds of thousands of viewers and subscribers that the hacked account was 'the official channel of a creator, artist, company, or public figure,'" wrote Ripple's lawyers. "This was completely false and profoundly harmful."
In addition to trademark infringement, Ripple is bringing claims under California's Statutory and Common Law Right of Publicity and California's Unfair Competition Law.
Ripple's lawyers from Boies Schiller did not respond to a request for comment Tuesday afternoon.
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