-
By
thekollab
- 6 Min Read
By
thekollab
A 73-page class-action lawsuit seeking $1 billion in damages has been filed against several high-profile YouTubers who allegedly “promoted crypto fraud without disclosing compensation” from the now-collapsed FTX exchange.
The case, which is being brought by Adam Moskowitz of The Moskowitz Law Firm, reads:
Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence.
Leading the international group of plaintiffs is Edwin Garrison, a private investor who claims that he and “thousands, if not millions, of consumers globally” have suffered damages through purchasing an “unregistered security from FTX in the form a YBA (Yield-Bearing-Account)” that was promoted by the defendants for their own benefit.
The filing states that in 2017 the SEC warned if YBAs are found to be securities, persons promoting them could be prosecuted for promoting an unregistered security or failing to properly disclose their payments and compensation.
The lawsuit claims that YouTube played a crucial role in how the influencers promoted FTX, noting that the video streaming platform is more popular than network television. It states:
FTX could not have arisen to such great heights without the massive impact of these Influencers, who hyped the Deceptive FTX Platform for undisclosed payments ranging from tens of thousands of dollars to multimillion dollar bribes.
Following the downfall of the crypto exchange, several of the defendants “scrubbed their YouTube channels of all video clips endorsing FTC and praising Sam Bankman-Fried” and some even replaced them with apology videos – according to the lawsuit.
Finance YouTuber Kevin Paffrath from the “Meet Kevin” channel has almost 2 million subscribers and several hundred-thousand followers on Twitter. He spoke with famed investigative journalist, Coffeezilla, about his take on the suit:
“It’s pretty obvious that when we say regularly, ‘Hey, we’re sponsored by…’ on our videos, or ‘Brought to you by…’, this is an ad. We even have to check a little box on our videos that say, ‘Hey, this video includes a paid promotion,’ and every one of our FTX ones has a little disclaimer that says this is paid.”
Meet Kevin later put out a 15 minute video addressing the lawsuit in full. In the video, Kevin explains that while he sympathises with victims who lost money in the FTX collapse – and that he would be willing to contribute to a recovery fund as charity – ultimately fault lies with FTX and Sam Bankman-Fried. Hence, he remains confident that the lawsuit against him will fail.
Whereas some of the other defendants named in the suit are taking a more passive approach to the class-action – in the sense that they are confidently expecting a court ruling in their favour – Ben Armstrong’s response was anything but lax.
I’ve never spoken with anyone at FTX or as a marketing agent acting on their behalf. Not once. So the allegations against me are 100% false, and it will be extremely easy to provide evidence of this.
In addition to the firey Tweet in which Armstrong declared that he will be filing a countersuit, The crypto YouTuber also launched a tirade of vitriol and legal threats directly at Adam Moskowitz – the attorney bringing forward the case.
Here’s some more emails I sent to Adam Moskowitz pic.twitter.com/bxRRVUTKmt
— Ben Armstrong (@Bitboy_Crypto) March 21, 2023
Countersuit coming. The lawyers on this case can’t possibly be more stupid. I’ve never had contact with anyone at FTX and never even had a reflink.
— Ben Armstrong (@Bitboy_Crypto) March 16, 2023
Show me you are dumb without telling me you are dumb.
I’m going to roast these Low IQ plebs and their lawyers https://t.co/1y2ct85vFq
BitBoy_Crypto’s impassioned response to being named in the lawsuit was so hostile that it spawned a separate lawsuit entirely unto itself – with Moskowitz suing on harassment charges.
You don’t get to throw my name through the mud legally for absolutely no reason.
We’ll keep you posted on updates about these cases as they break. Make sure you don’t miss out on the latest news, such as this dramatic story or many other stories in the web3 affiliate marketing landscape – by signing up to our newsletter.
Get prepared for the future of affiliate marketing.
The impact of the lawsuit targeting the YouTube influencers who promoted FTX [allegedly] without disclosing their financial relationship is yet to be determined. However, it will certainly lead to more scrutiny of influencer marketing practices, especially in the promotion of financial and crypto products. Influencers and content creators will likely need to be even more forthwright about their partnerships and disclose any potential conflicts of interest. Additionally, they may need to comply with applicable laws and regulations governing the promotion of securities and investments.
Collectively, these changes could lead to a shift towards more responsible and ethical influencer marketing practices in the financial and crypto industry.
Copyright 2024 TheKollab.