Ripple Labs filed a lawsuit against YouTube LLC in the Northern District of California on Tuesday, April 21. The case seeks compensation for Youtube’s failure to stop XRP (XRP) fraudsters and impersonators.
The plaintiffs, named Ripple Labs and CEO Brad Garlinghouse, are taking action against Youtube “to induce broad behavior change in the industry and set expectations for accountability,” according to the company’s official blog.
Ripple and Garlinghouse say the scam – often referred to as the “XRP Giveaway” – has already preyed on victims of “millions of XRP worth hundreds of thousands of dollars.”
The suit brings complaints against Youtube for: (i) violations of the Lanham Trademark Infringement Act; (2) violations of California statutory law and common law in advertising, and (3) violations of California’s unfair competition law.
The scam relies on spear phishing attacks against legitimate Youtube channels, according to the filing. Using a malicious email, attackers take over the Youtube channels of content creators – often those with legitimate links to Ripple.
The collapse of the typical attack path taken by fraudsters. Source: Ripple.com
Viewers of the videos in question are then prompted to send “between 5,000 XRP and 1,000,000 XRP” to a listed address, which promises a 5x return from the receiver.
Alleged YouTube complicity
The lawsuit states that YouTube intentionally profited from the actions of fraudsters, despite having the power to stop them. The deposit states:
YouTube profits from the scam by knowingly selling paid ads on behalf of scammers impersonating Ripple and Mr. Garlinghouse. Dubbed ‘video discovery ads’, these ads are designed by YouTube to appear at the top of the search results page alongside Organic search results.
Ripple cites several instances where Youtube has given verification badges to channels that have been taken over by scammers. Ripple claims that it has submitted 49 removal requests to Youtube related to fraud since November 2019. Another 305 complaints have been filed against channels that specifically impersonate Brad Garlinghouse, the document states.
Prosecutors claim that irreparable damage has already been done to both the Ripple brand and Brad Garlinghouse’s reputation. That damage was compounded by YouTube’s alleged “willful inaction,” according to the lawsuit.
“YouTube’s willful inaction has damaged – and continues to irreparably damage – Ripple’s brand and Mr. Garlinghouse’s reputation. YouTube’s inaction has also hurt countless individuals who have fallen victim to the scam. And this damage will continue to grow in scope and severity in the absence of court intervention.
The suit calls for any statutory, compensatory and punitive damages to be granted, and the recovery of any enrichment obtained on Youtube during the time period in which the frauds were active.