YouTube added to list of defendants in Bitconnect class action
YouTube, the US-based video-sharing website, has been added to the list of defendants in a class action lawsuit against the developers of cryptocurrency BitConnect.
Court documents filed this week added YouTube to the list of defendants in a lawsuit originally filed on 24 January by six individuals represented by Florida-based securities fraud law firm Silver Miller.
Bitconnect Ponzi accusation
Claimants in the class action accuse Bitconnect of issuing cryptocurrency tokens that were unregistered securities, obtaining funds through a “wide-ranging Ponzi scheme” that amounted to personal losses totalling $771,000.
Bitconnect allegedly used the funds obtained from the plaintiffs – as is usual in Ponzi schemes – to pay off the expected returns of existing investors.
YouTube video promotions
According to the court documents filed this week, Bitconnect and its affiliate defendants posted promotional videos on YouTube that allegedly persuaded potential investors into the fraudulent scheme.
The court document states that YouTube allegedly “disseminated fraudulent and harmful content to unsuspecting victims across the globe”.
It added: “The defendants operated a century-old fraud that was simple at its core – victims would invest in Bitconnect Investment Programs after they were driven to Bitconnect as result of profitable partnerships the affiliate defendents had with YouTube.”
The plaintiffs also allege that YouTube was negligent in failing to warn victims of the “harmful content”.
Rise and fall of Bitconnect
At the beginning of the year Bitconnect was in the top 20 most successful crypto tokens, hitting a record high of $463 in December 2017. By 30 January it had fallen to $5.92.
On 16 January, Bitconnect announced it was shutting down its cryptocurrency exchange after regulators from Texas and North Carolina issued a cease and desist order as the company was not registered to sell securities in those states.