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YouTube Shuns Fault for Crypto Scam in Dismissal Bid (2)

July 21, 2020, 7:35 PM; Updated: July 21, 2020, 10:22 PM

YouTube said it’s not at fault for cryptocurrency scammers using its platform, in moving Monday to dismiss a lawsuit by Ripple Labs Inc.

Section 230 of the Communications Decency Act “categorically bars” such suits, the Alphabet Inc.'s Google unit said in a motion in the U.S. District Court for the Northern District of California.

The motion shows how video-sharing platforms rely on a section of the 1996 law stating that computer services shouldn’t be treated as the publisher or speaker of other providers’ content.

A representative for Ripple didn’t immediately respond to a request for comment. A YouTube spokesperson said, “We take abuse of our platform seriously and take action quickly when we detect violations.”

Ripple sued YouTube in April, alleging it failed to stop bad actors from using the video-sharing platform to stage fraudulent “giveaways” that encouraged viewers to send XRP, the blockchain company’s digital currency.

Ripple alleges the scam took hundreds of thousands of dollars from victims, and harmed Ripple’s brand and the image of CEO Bradley Garlinghouse.

YouTube in its motion said there’s “no plausible allegation” the video-sharing platform used Garlinghouse’s identity. Also, it is not enough to allege that YouTube merely contributed to the misappropriation, the company said.

In the April lawsuit, Ripple alleged that YouTube granted a verification badge to one of the hacked channels and also profited from the scams by “knowingly selling” paid ads on behalf of the fraudsters impersonating Ripple.

YouTube in its motion said those badges did not change the third-party content into material that the social media giant created or developed, and added that its “unwitting verification” of the scam account was not itself unlawful.

The company noted that Section 230 “bars claims lodged against website operators for their editorial functions, such as the posting of comments concerning third-party posts, so long as those comments are not themselves actionable.”

The case is: Ripple Labs Inc. et al v. YouTube LLC, N.D. Cal., No. 3:20-cv-02747, motion 7/20/20

(Updated with additional reporting. Earlier version corrected date of motion.)

To contact the reporter on this story: Jake Holland in Washington at jholland@bloombergindustry.com

To contact the editor responsible for this story: John Hughes at jhughes@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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