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Ripple Labs Sues YouTube for Enabling Cryptocurrency Scam

screenshot of Ripple Inc. page in Youtube.
Written by publisher team

Financial technology company Ripple Labs Inc. Its CEO is suing YouTube for trademark infringement over the failure to stop the cryptocurrency scam on its platform.

In a complaint filed Tuesday with the US District Court for the Northern District of California, attorneys for Ripple’s Boies Schiller Flexner assert that YouTube committed a “willful and inexplicable failure” to address a fraud claiming to give away Ripple’s XRP cryptocurrency. The lawsuit asserts that the scam, which uses the image of CEO Bradley Garlinghouse to lure phishing users, “deceived victims out of millions of XRP worth hundreds of thousands of dollars.”

“The fraud also irreparably damaged the Ripple brand and Mr Garlinghouse’s reputation,” wrote Damien Marshall, Mark Mau, Matthew Cho and Mino Goodman. “By infringing on the protected trademarks of Ripple and misappropriating the image and likeness of Mr. Garlinghouse, the fraud reinforces the misconception that Ripple and Mr. Garlinghouse are somehow connected or blamed for the fraud (they are not), and it also creates a state of non-existence. Deep uncertainty and confusion in the broader digital asset market.”

The scam, which has been repeated by many bad actors, often targets the accounts of popular YouTubers with thousands of subscribers, according to the complaint. Once the hackers obtain the credentials of YouTube users’ accounts, they strip the content and often replace it with profile pictures and thumbnails that look like Garlinghouse. Describing 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 exchange.

“We take abuse of our platform very seriously and take prompt action when we discover violations of our policies, such as scams or impersonation,” a YouTube spokesperson said.

Ripple maintains that YouTube refuses to stop the scam even after Ripple issued 49 takedown requests to address accounts directly linked to fraud and 305 requests to address accounts that were infringing on its trademark and Garlinghouse likeness. The complaint also alleged that YouTube took action on several occasions but waited between three weeks and two months to do so.

Besides YouTube’s “deliberate inaction” and the generation of ad revenue from the videos, the complaint alleges that YouTube is also checking one of the accounts perpetuating the scheme.

“By awarding a ‘verification badge’ to a hacked channel that was impersonating plaintiffs to promote the scam, YouTube informed hundreds of thousands of viewers and subscribers that the hacked account was the ‘official channel of a creator, artist, company or public figure,’” Ripple lawyers wrote. This is completely wrong and extremely harmful.”

In addition to trademark infringement, Ripple makes claims under statutory right of publicity, California common law, and California unfair competition law.

Lawyers for Ripple of Boise Schiller did not respond to a request for comment Tuesday afternoon.

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