Swedish attorney Lars Olofsson filed a class action suit against Facebook and Instagram parent Meta (NASDAQ: META) in connection with the cannabis Ponzi scheme Juicy Fields. Plaintiffs in the case number more than 800 individuals from 50 countries.
The suit alleges that Meta was grossly negligent and “failed to control who they allowed to use the platforms, and in direct violation of Meta’s own terms of service.” Charges filed against Meta include Swedish penal code violations for fraud, aggravated fraud, as well as aiding and abetting fraud and aggravated fraud.
Olofsson filed suit in district court in Luleå, Sweden, because Meta has a global server center located in the area.
“This is where the crime has been committed because it is from these servers that the clients have been exposed to Juicy Fields’ scam,” he said.
After being fined and banned from trading by German finance regulator BaFin in June, Juicy Fields was shut down by mid-July. According to Olofsson, up to 2 billion euro is missing from investors accounts, affecting thousands in countries all over the world but particularly in Spain, France, Portugal, Germany, the Netherlands, and Malta.
As precedent for holding large tech platforms responsible for due diligence regarding illegal activities by their affiliates, advertisers, or clients, Olofsson previously cited a case in which the plaintiff accused credit card company VISA with providing payment processing for distribution of child pornography on adult media platform Pornhub. While the case is ongoing, VISA and Mastercard moved to suspend card payments for advertising on Pornhub and its parent company Mindgeek in August after a motion to dismiss the case was denied.
The recent debacle at billion-dollar bitcoin exchange FTX also heightened scrutiny on fintech platforms that use aggressive media marketing tactics to promote risky investment schemes.
On Nov. 15, a class action lawsuit was filed in U.S. District Court in Florida that charged FTX with misleading customers, resulting in billions of dollars in damages for investors.
Also named in the suit are several celebrities that promoted FTX, including Tampa Bay Buccaneers quarterback Tom Brady and Brady’s ex-wife, supermodel Gisele Bündchen; Golden State Warriors guard Stephen Curry; Kevin O’Leary of ABC’s Shark Tank; and comedian Larry David, who appeared in a Super Bowl commercial for FTX. The Golden State Warriors were named as well, after partnering with FTX to display the company logo on the team’s home court.
As in the Juicy Fields case, FTX is accused of targeting “unsophisticated investors.” Edwin Garrison, a plaintiff in the FTX case, said endorsements and marketing influenced him to trust the company and invest funds that now appear to have been lost.
Beleaguered former FTX CEO Sam Bankman-Fried was interviewed by CNBC’s Andrew Ross Sorkin on Nov. 30 at the DealBook Summit and said, “I didn’t ever try to commit fraud on anyone.”