A class action lawsuit alleges that Yuga Labs stakeholders conspired with celebrities to deceive potential investors. Yuga Labs is the parent business of the NFT series Bored Ape Yacht Club and its associated digital items.
The 37 defendants in the complaint, which was filed on December 8 in federal district court in Los Angeles, are listed as Kevin Hart, Gwyneth Paltrow, Madonna, Justin Bieber, Serena Williams, Jimmy Fallon, Paris Hilton, Snoop Dogg, The Weeknd, Post Malone, and NBA player Steph Curry, as well as Yuga partners, including veteran music manager Guy Oseary. Amy Wu, who recently left the failing cryptocurrency exchange FTX and served as an adviser and board member of the ApeDAO, is also mentioned.
For the plaintiffs and the alleged class of “all individuals similarly situated,” the complaint demands monetary damages of at least $5 million.
When contacted by Variety, a spokeswoman for Yuga Labs stated, “In our opinion, these assertions are parasitic and opportunistic. We are eager to demonstrate our conviction that they are without merit.
Plaintiffs Adonis Real and Adam Titcher assert that by endorsing or promoting the Bored Ape community on social media and through other channels, these celebrities and sports inflated and distorted the value of non-fungible tokens (NFTs), engaged in deceptive advertising, and received monetary benefits. The two further claim that MoonPay was participating in the “scheme,” facilitating ownership transfers to the mentioned celebrities, some of whom were service backers. One of these investors is Fallon, who is mentioned along with Hilton’s visit on “The Tonight Show” on January 24, 2022, and who on-air referred to MoonPay as “the PayPal of crypto” on an episode of Beeple, a digital artist, on November 11, 2021.
Another notable piece of advertising was an FTX teaser video with the phrase, “When learning about crypto, you’ll be anything but bored,” with Steph Curry crafting an ice sculpture of a Bored Ape.
According to the complaint, Yuga receives a 2.5% royalty rate “every time one of its NFTs is resold on the secondary market” from the more than 103,000 unique account holders of its securities, which include the Bored Ape offshoot Mutant Ape Club, the metaverse “Otherside,” which offered virtual land sales, and the token ApeCoin.
The class action’s time frame is from April 24, 2021, until the present. Bored Ape NFTs were fetching in the hundreds of thousands of dollars with what were considered unusual qualities at the height of its portfolio in early 2022. The lawsuit claims that Real bought ApeCoin tokens, Plaintiff Titcher bought a Mutant Ape and an Otherdeed for the Bored Ape metaverse Otherside.
A risk of investing in NFTs is that they are still traded in an unregulated market. The crypto meltdown, which started in the early summer and received another blow in November with the demise of FTX, is another factor influencing the market. Celebrity “brand ambassadors” for FTX, including Larry David, Tom Brady, Giselle Bündchen, Shaquille O’Neal, and Steph Curry, were named in a class-action complaint filed on November 15.
The case was brought in the Western Division of the U.S. District Court for the Central District of California against Yuga Labs and others. Docket number 2:22-CV-08909-FMO-PLA refers to the case. The San Diego law firm Scott & Scott, which made its intention to create a class action public in July, is the plaintiffs’ representative. Warner Music Group, Live Nation, Beyond Meat, and Poshmark were among the companies the business targeted in November via a series of “investigation warnings” for allegedly breaching fiduciary obligations.
A federal judge dismissed a class action lawsuit this week against Kim Kardashian, Floyd Mayweather, and other celebrities who promoted EthereumMax. Judge Michael Fitzgerald of the Central District of California reportedly said in his rejection that “While the law definitely establishes boundaries on what can be done,”