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YouTube has a bitcoin scam problem, too, lawsuit alleges

Twitter accounts targeted in bitcoin scam
Twitter accounts targeted in bitcoin scam 03:26

Cryptocurrency criminals are lurking on YouTube, a recent lawsuit filed by Apple co-founder Steve Wozniak claims.

Most of the schemes involve scams that purport to be giving bitcoins away but in fact are designed to steal the virtual money, along with other types of cryptocurrency, from users of the popular streaming video site. Wozniak's complaint alleges YouTube has hosted videos that use footage of him without his permission to pull off the bitcoin scams.

A July study by analytics firm Whale Alert found that YouTube users had lost $24 million in bitcoin and related scams in the first six months of 2020. That's up from $14 million over the prior three and a half years combined.

A spokesperson for Alphabet-owned YouTube told CBS MoneyWatch it removed 2.3 million videos and closed 1.7 million accounts in the first three months of the year in connection with scams and other deceptive practices on its platform. YouTube did not confirm how many of those scams included cryptocurrencies, but the spokesperson denied that bitcoin-related fraud is a major problem for the site.

The number of videos YouTube has taken down that were tied to scams has dropped dramatically this year. A YouTube spokesperson attributed that decline to factors that include its evolving enforcement practices. According to YouTube's enforcement page, the site has been relying more heavily on technology to police its platform this year, in part because of staffing issues caused by the COVID-19 pandemic. 

Of the 6 million videos that YouTube removed over the first three months of 2020, about 400,000 were taken down because of a user complaint or because of detection by YouTube's human enforcement team. That was down from nearly 2 million in the same period in 2019.

New coin, old pitch: You'll double your money back

Perhaps the most common type of cryptocurrency scam on YouTube features a famous person, often a technology entrepreneur like Wozniak, discussing bitcoin at a conference or other public venue. The videos promise users that if they send bitcoin to an electronic wallet named in the segment before it ends, they will get double that amount back. The videos appear to be livestreams of events, but are not.

Myreille Philistein, a market researcher in Brooklyn, New York, who is also suing YouTube in connection with one of the scams, said she was on the site's homepage on May 15 when an ad popped up for a live event featuring Dell Technologies founder Michael Dell. According to the suit, Philistein believed the video that she was watching was live and that thousands of other viewers were also watching. Neither was true. Philistein claims she sent $800 in bitcoin and lost her money.

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A keyword search "bitcoin giveaway" this week by CBS MoneyWatch did not find any videos on YouTube promising users that they could double their money if they sent bitcoins to an address. By contrast, there were a number of videos warning about the scam.

Wozniak, along with 17 people who say they have lost money in similar schemes, filed a suit against YouTube and Google last week. The scams featuring recordings of him damaged his reputation, according to the complaint. 

Wozniak said he discovered the fraudulent videos earlier this year after being notified by individuals, who were not identified in the suit, who were tracking the growing scam. Since then, Wozniak said in the complaint he has contacted YouTube repeatedly asking for the videos to be taken down, but without success. 

Wozniak also alleged that, while some of the scam videos are no longer on YouTube, others continue to pop up. 

"It's like whack-a-mole," he said during a press conference discussing the suit. "The feeling that I get is that YouTube just doesn't care."

The YouTube spokesperson declined to comment on Wozniak's suit. 

Celebs, moguls, politicians

Bitcoin has been a growing source of scams on social media. In mid-July, the Twitter accounts of some of the world's richest and most influential politicians, celebrities, tech moguls and companies were hacked as part of a bitcoin scam. In the attack, hackers seized accounts belonging to Elon Musk, Joe Biden, Jeff Bezos, Michael Bloomberg, Kim Kardashian West and Bill Gates, among others, and sent phony tweets asking millions of followers to send bitcoin to an electronic wallet. 

Twitter took down the phony tweets hours after they were reported. Wozniak said Twitter's rapid response to the cyberattack is in part why he decided to go forward with the suit against YouTube.

"These videos were promoted from verified accounts, and they were pushed to people who were likely to be interested," said Brian Danitz, an attorney at law firm Cotchett Pitre & McCarthy, which is representing Wozniak and other plaintiffs in the suit. "YouTube has extraordinary technology and tools. They could have prevented this."

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