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Ripple sues YouTube over cryptocurrency scams

Ripple sues YouTube over cryptocurrency scams
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SAN FRANCISCO (Reuters) – Blockchain firm Ripple sued YouTube company Alphabet Inc on Tuesday, alleging that the video-sharing platform failed to protect consumers from cryptocurrency scams that use fake social media profiles to trick victims into sending money .

FILE PHOTO: The logo of blockchain company Ripple appears at the SIBOS banking and financial conference in Toronto, Ontario, Canada, October 19, 2017. Photo taken on October 19, 2017. REUTERS/Chris Hellgren

The company says YouTube scammers are impersonating Ripple and its CEO, Brad Garlinghouse, to entice viewers to send thousands of dollars in XRP, a cryptocurrency that Ripple is defending, according to a court filing.

The scammers promised to send up to 5 million XRP, worth nearly $1 million, but victims who participate in the fake “giveaways” do not receive any money in return, the filing says.

The lawsuit appears to be preparing to provoke a new challenge over the controversial Section 230 of the Communications Decency Act, which protects Google, Facebook and other internet companies from liability for material posted by users on their platforms.

Regulators in Washington are rethinking the need for broad immunity from the law, which has helped US tech companies grow but is increasingly seen as a haven enabling some of the world’s richest companies to avoid investments to curb crime, extremism and misinformation online.

“For every scam, giveaway, and phony conspiracy that gets removed, it pops up multiple more times almost instantly,” Ripple said in a blog post. “YouTube and other big tech and social media platforms must be held accountable for not implementing adequate processes to combat these scams.”

Garlinghouse, a longtime Silicon Valley CEO, said he wanted the case to be a “call to action” for the social media industry, arguing that the law was written “at a time when we didn’t understand how these platforms could be misused.”

He said he saw similar impersonations on platforms including Facebook’s photo-sharing app Instagram, but he targeted YouTube in the lawsuit because it was “slower to respond and less proactive.”

YouTube spokesperson Alex Joseph said the company takes abuse of the platform very seriously and acts “quickly when we discover violations of our policies, such as scams or impersonation.”

Founded in 2012, Ripple is one of the best known companies developing the so-called blockchain technology, or the system that underlies cryptocurrencies. The company is developing blockchain systems to help financial services companies make cross-border payments using XRP.

His filing, in the US District Court for the Northern District of California, says YouTube’s failure to address “pervasive malicious fraud” has damaged the reputations of both Ripple and Garlinghouse.

Ripple said millions of people watched the scams on YouTube, enabling the fraud to spread by ignoring its demands to remove the videos and continuing to sell ads to scammers.

YouTube also awarded a “verification badge” to a hacked channel displaying Garlinghouse’s photo as its profile picture, falsely indicating to viewers that the account was legitimate, the filing said.

(Additional reporting by Katie Paul; Additional reporting by Anna Errera and Dave Parrish); Editing by Steve Orlovsky and Richard Boleyn

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