Youtube in a Ripple Pickle: Crypto firm sues YouTube for giveaway scams

May 29, 2020

2 min read

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What's going on here?

San Francisco-based cryptocurrency firm Ripple sues YouTube for failure to protect consumers from cryptocurrency “giveaway” scams carried out by fake profiles impersonating its CEO.

What does this mean?

Ripple’s expertise is focused on developing blockchain technology that helps carry out cross-border payments using the digital currency XRP. Scammers have created official-sounding accounts under Ripple’s name, impersonating its CEO, Brad Garlinghouse. The fake “giveaways” were bait to trick viewers into sending thousands of dollars’ worth of XRP to the hackers. The complaint claimed that YouTube gave one these hacked scam accounts a “verification badge” which made the content seem legitimate. This resulted in customers thinking that Ripple had stolen their money

The company filed a complaint to the San Francisco federal court, claiming that YouTube has “ignored or otherwise failed to address” the giveaway scams, failing to protect consumers. Garlinghouse stated that YouTube’s failure damaged both his and Ripple’s reputation as well as its trademark. The Silicon Valley executive proclaimed his aspirations for this lawsuit to be a trigger to change outdated laws governing the social media industry.

What's the big picture effect?

Cryptocurrency scams have been an ongoing problem for social media platforms. For example, in April, impersonators hacked a YouTube channel pretending to run a Q&A session with the CEO of Coinbase, another prominent cryptocurrency company. As YouTube has become more popular with crypto scammers, there has been legal uncertainty over YouTube’s responsibility

Section 230 of the Communication Decency Act is a landmark internet legislation in the United States that shields providers from liability for the action of their users. Section 230 offers protection to companies classified as “neutral public forums/platforms” to ensure freedom of speech of their users. On the surface, it seems appropriate that YouTube invokes Section 230 to dismiss the alleged complaints. So, what’s the problem?

The broad scope of Section 230 has been exploited by companies such as YouTube to justify selective censorship on third-party speech and absolve themselves from liability. Making editorial choices by blocking or removing content is contrary to the principle of “neutrality”. This puts YouTube in the “publisher” category which is exempt from the shield of Section 230.  This issue could go beyond mere consumer protection. Ripple also accuses the video-sharing company of damaging its trademark, making it an intellectual property case which is excluded from the application of Section 230. 

The Communication Decency Act was passed in 1996 and arguably is now outdated. In a political bid, lawmakers in Washington have been advocating for narrowing the scope of Section 230. This legislative change would ensure increased accountability for big tech companies. In February 2020, the US Department of Justice held a workshop to discuss potential amendments to Section 230. Nevertheless, it remains uncertain when or if changes will be made. This legislative change would be an opportunity to improve cybersecurity, prevent abuse of the law and impede the spread of “fake news”. Could this new lawsuit give us a new definition of the ripple effect?

Report written by Selin Alagoun

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