Ripple Files Lawsuit Against YouTube

On April 21, Ripple Labs filed a lawsuit against YouTube LLC in the Northern District of California. The case seeks damages for YouTube’s failure to stop XRP scammers and impersonators.

According to the official company blog post, the plaintiff, named as Ripple Labs and its CEO Brad Garlinghouse, are taking action against YouTube in order to “prompt an industry wide-behavior change and set the expectation of accountability.”

Ripple and Garlinghouse state that the scam, called “The XRP Giveaway”, has already defrauded victims of “millions of XRP valued at hundreds of thousands of dollars”.

The following complaints are listed in the lawsuit: (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 runs on spear-phishing attacks against legitimate YouTube channels, as stated in the filing. Using a malicious email, the attacker takes hold of the YouTube channels of content creators, often legitimately connected with Ripple.

An analysis of the typical scam process. Source: Ripple.com

People who watch the videos in question are then prompted to send “between 5,000 XRP and 1,000,000 XRP” to a specified address which promises 5x returns from the receiver.

YouTube’s alleged complicity

The lawsuit alleges that YouTube knowingly reaps benefits from the actions of the scammers, despite having the power 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 refers to several occasions when YouTube awarded verifications badges to channels which had been taken over by the fraudsters. Ripple states it has filed 49 takedown demands to YouTube concerning the scam since November 2019. Another 305 complaints were filed against channels impersonating Brad Garlinghouse specifically, according to the document.

The plaintiffs claim that irreparable damage has already been inflicted on Ripple brand and Brad Garlinghouse’s reputation as well. The damage was worsened by YouTube’s alleged “deliberate inaction,” as stated by 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 demands the award of any statutory, compensatory and punitive damages, and a restitution of any enrichment Youtube has get over the time frame the scams were active.