Palmer legal action threat for comedian

In a video posted to YouTube on Sunday, comedian Jordan Shanks says Mr Palmer was seeking $500,000 in damages over a separate video he published in January, and again on the eve of the May federal election.

He shows a letter that appears to be from Mr Palmer's lawyer, Sam Iskander, that claims Mr Palmer's reputation was damaged by the video, in which he is called a "crackpot" and "considered a walking meme".

Mr Iskander said a letter was sent in May seeking an apology and a retraction but there's no current lawsuit between Mr Palmer and Mr Shanks.

"Our client has suffered actual damage as a result of defamatory comments published, including but not limited to extreme embarrassment and humiliation and damage to professional, personal or political reputation," says the letter shown in the video.

But Mr Shanks is not concerned by the threat of legal action.

"He made one tiny miscalculation and that is, I'm a millenial, going bankrupt doesn't scare me, I don't have a house," he said in Sunday's video.

"I have as many assets as you have seats in parliament: None."

The YouTuber, known as friendlyjordies, also called the billionaire a "dense humpty dumpty" and "Fatty McF*** Head" in the video.

In the letter, Mr Iskander apparently says depictions of Mr Palmer in the video were also defamatory, specifically one in which an image of Mr Palmer's head was used in a cartoon video depiction of Homer Simpson.

"We are instructed to commence defamation proceedings against you in the Supreme Court at Brisbane for general damages, special damages and even possibly aggravated damages in the amount of $500,000."

Mr Shanks then tore up the document.

"I've got another copy of the letter, that was just for dramatic effect," he said afterwards.

"See you in court, tub tub."

Australian Associated Press