There have been many instances of people calling NFT projects or cryptocurrencies fraudulent. Class actions and complaints are common. However, the Bored Ape Yacht Club (BAYC) has long stood out amongst its peers in the NFT world, not only for its market cap but its cultural influence. Now, it is the subject of legal action, with a class action saying that stakeholders in Yuga Labs, the parent company of BAYC, conspired with celebrities to defraud potential investors.
Who was named in the lawsuit? The complaint targeted partners of Yuga Labs, with a total of 37 defendants. Among those named were Kevin Hart, Madonna, Justin Bieber, Gwyneth Paltrow, Jimmy Fallon, and Snoop Dogg. Additionally, it named Amy Wu, who recently left the fallen crypto exchange FTX.
Plaintiffs claim endorsements caused NFT values to balloon. According to Adonis Real and Adam Titcher, the promotions of the Bored Ape community through social media and other sources inflated and distorted prices. They also claim that the entertainers and athletes that endorsed BAYC engaged in misleading promotions that failed to disclose financial compensation.
- There are allegations that the scheme involved MoonPay since it allowed for the transfer of ownership to the celebs in question. It was called “the PayPal of crypto” by investor Jimmy Fallon on “The Tonight Show.”
- Another example is an FTX commercial featuring Steph Curry in which he was carving a Bored Ape ice sculpture. It included the tagline, “Crypto. You’ll be anything but bored.”
Damages: The lawsuit is asking for $5 million in monetary damages for the plaintiffs and the punitive class that includes anyone else “similarly situated.” According to the lawsuit, the plaintiffs Titcher and Real both purchased items under Yuga’s banner. Titcher purchased a Mutant Ape and an Otherdeed for the Bored Ape metaverse Otherside. Meanwhile, Real purchased ApeCoin tokens.
Similar lawsuits: There have been numerous lawsuits surrounding NFT and crypto investments where people find themselves suddenly losing big in the volatile market. In November, a class action targeted brand ambassadors of FTX, claiming they deceptively encouraged people to invest.
- One class action against celebrity promoters of EthereumMax, which included Kim Kardashian and Floyd Mayweather, was recently dismissed. However, Kim Kardashian paid over $1 million to settle with the SEC in October.
- There has been growing concern over the ability of celebrities to influence millions of people into buying something as volatile and uncertain as crypto.
Yuga Labs denies the claims. A spokesperson for the company said, “In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much.”
The state of NFTs and cryptocurrency plays a role. More and more crypto and NFT companies have found themselves under scrutiny as the industry continues to struggle. FTX is one example, but Binance and similarly large players are also experiencing difficulties, which has made investors nervous. It does not help that fraud accusations seem common within the industry.