Ripple Labs filed a lawsuit against Youtube LLC in the Northern District of California on Tuesday April 21. The case seeks damages for Youtube’s failure to stop XRP (XRP) scammers and impersonators.
The plaintiffs, named as Ripple Labs and its CEO Brad Garlinghouse, are taking action against Youtube to “prompt an industry wide-behavior change and set the expectation of accountability,” according to an official company blog post.
Ripple and Garlinghouse say the scam - often referred to as “The XRP Giveaway” — has already defrauded victims of “millions of XRP valued at hundreds of thousands of dollars”.
The lawsuit lodges complaints against Youtube for: (1) Violations of the Lanham Act for Trademark Infringement; (2) Violations of California’s Statutory and Common Law Right of Publicity, 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, the attackers commandeer the Youtube channels of content creators - often those with legitimate ties to Ripple.
A breakdown of the typical attack route taken by the scammers. Source: Ripple.com
Viewers of the videos in question are then urged to send “between 5,000 XRP and 1,000,000 XRP” to a listed address, which promises 5x returns from the receiver.
Youtube’s alleged complicity
The lawsuit states that Youtube knowingly profits from the actions of the scammers, despite having the ability to stop them. The filing states:
“YouTube profits from the Scam by knowingly selling paid ads on behalf of the fraudsters who are impersonating Ripple and Mr. Garlinghouse. These ads — so-called ‘video discovery ads’ — are designed by YouTube to appear at the top of its search result page alongside organic search results.”
Ripple cites several instances where Youtube awarded verifications badges to channels which had been taken over by the scammers. Ripple claims it has filed 49 takedown demands to Youtube relating to the scam since November 2019. Another 305 complaints were filed against channels impersonating Brad Garlinghouse specifically, the document states.
The plaintiffs allege that irreparable harm has already been done to both Ripple’s brand and Brad Garlinghouse’s reputation. That harm was worsened by Youtube’s alleged “deliberate inaction,” according to the lawsuit.
“YouTube’s deliberate inaction has irreparably harmed — and continues to irreparably harm — Ripple’s brand and Mr. Garlinghouse’s reputation. YouTube’s inaction has also injured countless individuals who fell victim to the Scam. These harms will continue to grow in scope and severity absent intervention by the Court.”
The lawsuit calls for the award of any statutory, compensatory and punitive damages, and a restitution of any enrichment Youtube has received over the time period the scams were active.