BitConnect was a high-yield cryptocurrency investment Ponzi scheme that collapsed in January 2018, and now YouTube is being sued for alleged negligence in propagating BitConnect content. Apparently, YouTube published over 70,000 hours of unedited BitConnect connect, generating 58 million views, possibly resulting in hundreds of thousands of victims.
The founder of the Silver Miller law firm which has launched the class action Bitconnect lawsuit, David Silver, says, “The platform allowed BitConnect to reach hundreds of thousands of potential investors, all while YouTube was aware that BitConnect was a scam. As the old saying goes: Sometimes when you lie down with dogs, you get fleas.”
BitConnect promised daily interest earnings for cryptocurrency invested on their site, up to 40% per month, with an additional interest rate of 0.25% daily for people that invested over USD 10,000. BitConnect had a native cryptocurrency, BCC, that had a market cap of USD 2.5 billion at the peak of the scheme.
BitConnect announced that it was closing up due to negative reports by the media and said it would repay all loans with BCC. They did this maliciouslysince they waited to repay loans until after the announcement. In January 2018 BCC lost over 99% of its value, as victims scrambled to sell their coins, and BitConnect was able to repay all loans for a minuscule fraction of the real loan value. BCC is effectively dead at this point with the daily trading volume of USD 100. This might be the most catastrophic and complete collapse of a cryptocurrency in history, having gone from a market cap of USD 2.5 billion to virtual death in less than six months.
The BitConnect scandal may be part of the reason that YouTube’s parent company, Google, banned all cryptocurrency advertisements. However, this ban does not affect content being posted on YouTube.
It remains up to the court to decide if YouTube is actually responsible for people being victimized by the content in videos posted on their platform. A tremendous amount of videos are posted on YouTube every day, and it would be quite difficult for YouTube to look through all the videos and delete ones related to cryptocurrency scams. Additionally, it can be argued that people need to be responsible for their own investment decisions.