A class action lawsuit filed by investors against multiple internet influencers, including Ben Armstrong (BitBoy) and Graham Stephan, has sparked a debate on the responsibilities of paid promoters in the cryptocurrency industry.
The lawsuit alleges that the influencers pushed unregistered securities on their viewers and followers while promoting failed cryptocurrency trading platform FTX. The plaintiffs are seeking over $1 billion in damages, stating that the defendants played a major role in elevating the collapsed business.
Ripple CTO David Schwartz has weighed in on the issue, defending the influencers in a series of tweets.
Schwartz argued that it is not reasonable to expect a paid promoter to do more than minimal diligence on the companies they promote, and that there are strong policy and free speech reasons to keep it that way.The Ripple executive also highlighted the potential consequences of imposing liability on promoters in the absence of wrongdoing, stating that it would be harder for legitimate businesses that are smaller, newer or in "riskier" sectors to speak through spokespeople.
He further argued that imposing liability on promoters could lead to censorship of both crypto companies and promoters.
In response to a tweet suggesting that some victims of fraud might prefer to be compensated rather than see the promoter publicly embarrassed and suffer a hit to his reputation, Schwartz emphasized the importance of free speech. He argued that government punishment for speech in the absence of any kind of wrongdoing is just the government making people shut up.
The debate surrounding promoter liability and free speech in the cryptocurrency industry is likely to continue as the lawsuit against FTX promoters progresses.