Three consumers have filed a class action lawsuit against Meta Platforms in California federal court, alleging the social media giant knowingly profits from cryptocurrency investment scams on Facebook and Instagram. The plaintiffs claim Meta has long been aware of fraudulent advertisements but refuses to invest meaningfully in detection and prevention, instead using artificial intelligence to amplify scam effectiveness across vulnerable user segments.
Niroshini Dassanayake, Kenneth Gugel, and Andrew Svoboda argue that Meta’s own algorithms target scam ads toward users most likely to engage with them, creating a system that protects advertising revenue rather than user safety. The lawsuit states Meta has “refused to invest meaningfully in technology, personnel and processes to monitor, identify and prevent these scam ads” on its platforms.
According to the complaint, Meta has even invested in AI tools that generate hundreds of variations of fraudulent ads, each optimized to drive engagement by vulnerable users. The defendants’ inaction stands in contrast to the company’s substantial technical capabilities and resources.
How Scammers Targeted Users Through Meta Ads
The plaintiffs describe a deliberate exploitation pattern. Victims received cryptocurrency investment scam ads on Facebook and Instagram that instructed them to deposit funds to trade digital assets. Meta’s algorithms actively steered these deceptive promotions to people most likely to interact with them.
Once victims made deposits, their funds were transferred to cryptocurrency wallets controlled by scammers and their associates. The lawsuit identifies these transfers as direct losses resulting from Meta’s failure to stop the fraudulent advertising.
The plaintiffs allege they fall into a nationwide class of persons and entities who received cryptocurrency investment ads on Meta’s platforms and suffered financial losses after investing in the promoted schemes. They seek class certification, injunctive relief, monetary damages, attorney fees and costs, and a jury trial.
The legal claims rest on violations of California consumer protection laws and breach of contract. These arguments challenge Meta’s responsibility for the harm enabled by its advertising systems and platform algorithms.
The Broader Pattern of Crypto Scams on Social Media
This class action reflects growing concerns about cryptocurrency fraud across social platforms. Similar enforcement actions have already emerged, signaling heightened scrutiny of Meta’s role in enabling financial scams. State and local authorities have also begun investigating the company’s practices.
Meta has previously dismissed allegations of involvement in cryptocurrency schemes. A federal judge in California recently dismissed two separate class action lawsuits against Meta over claims that AI tools enabled pump-and-dump schemes causing nearly $30 million in investor losses, though the current suit uses different legal theories.
The plaintiffs’ allegations center on Meta’s knowledge and inaction as the core problem. The complaint emphasizes that Meta possesses the technical sophistication and financial resources to combat fraudulent advertising yet chooses not to deploy them at scale. This framing shifts accountability from bad actors to the platform itself.
The lawsuit is styled Dassanayake, et al. v. Meta Platforms Inc., et al., Case No. 26-cv-09521, in the U.S. District Court for the Northern District of California. Plaintiffs are represented by attorneys from Kessler Topaz Meltzer & Check LLP and Wagstaff & Cartmell LLP.
The timing of this suit reflects broader pressure on technology companies to address cryptocurrency-related fraud on their platforms. As crypto scam losses continue to mount, regulatory and legal scrutiny of intermediaries that facilitate or tolerate deceptive advertising is intensifying. Whether courts will hold platforms accountable for algorithm-driven targeting of scam ads remains an open question, but the lawsuit establishes a theory that could influence future enforcement actions across the industry.
Frequently asked questions
Why are consumers suing Meta over cryptocurrency ads?
Three consumers allege Meta knowingly enables and profits from cryptocurrency investment scam ads on Facebook and Instagram while using AI to amplify their reach.
How does Meta allegedly help cryptocurrency scammers?
The lawsuit claims Meta’s algorithms target scam ads to vulnerable users most likely to engage, and the company generates hundreds of ad variations optimized for engagement.
What are the plaintiffs seeking from Meta?
Plaintiffs seek class certification, monetary damages, attorney fees, costs, an injunction, and a jury trial under California consumer protection laws and contract law.
Where was the Meta cryptocurrency lawsuit filed?
The class action was filed in U.S. District Court for the Northern District of California under case number 26-cv-09521.
Have other legal actions been brought against Meta over crypto schemes?
Yes, a federal judge dismissed two earlier class actions alleging Meta’s AI tools enabled pump-and-dump schemes causing nearly thirty million dollars in losses.
