Yuga Labs, the creator of Bored Ape Yacht Club (BAYC), has been sued in a high-profile case along with multiple A-list celebrities for allegedly defrauding potential investors in NFT endorsements by artificially inflating and distorting prices and engaging in misleading promotions.
According to Variety, a class-action lawsuit contends that stakeholders in Yuga Labs, the parent company of NFT series Bored Ape Yacht Club and its affiliated digital products, engaged in a conspiracy with celebrities to defraud potential investors. “Defendants’ promotional campaign was wildly successful, generating billions of dollars in sales and re-sales,” says the lawsuit from Adonis Real and Adam Titcher filed on December 8 in U.S. District Court in California.
“The manufactured celebrity endorsements and misleading promotions regarding the launch of an entire BAYC ecosystem (the so-called Otherside metaverse) were able to artificially increase the interest in and price of the BAYC NFTs during the Relevant Period, causing investors to purchase these losing investments at drastically inflated prices,” the lawsuit adds. The lawsuit seeks monetary damages of at least $5 million on behalf of the plaintiffs and the putative class of “all others similarly situated.”
The report further shares, plaintiffs Adonis Real and Adam Titcher claim that in promoting or endorsing the Bored Ape community through social media and other mediums, these entertainers and athletes caused the value of non-fungible tokens (NFTs) to balloon to “artificially inflated and distorted prices” and engaged in misleading promotions that did not disclose alleged financial compensation.
Variety then cites the two also allege that the “scheme” involved MoonPay, which facilitated transfers of ownership to the celebrities named, some of whom were backers of the service. One such investor named is Fallon, whose on-air name-check of MoonPay as “the PayPal of crypto” on a November 11, 2021, episode the digital artist known as Beeple, is cited, as is a January 24, 2022, appearance on The Tonight Show by Hilton.
The complaint states that there exist more than 103,000 unique account holders of Yuga securities —, which includes the Bored Ape offshoot Mutant Ape Club; the metaverse “Otherside,” which offered virtual land sales; and the token ApeCoin — of which Yuga receives a 2.5% royalty rate “every time one of its NFTs is resold on the secondary market.” The period specified in the class action lawsuit is from April 24, 2021, to present.
The lawsuit was filed in the U.S. District Court for the Central District of California, on behalf of investors who purchased or acquired the Yuga securities “and who were damaged thereby,” according to a statement. “In our view, these claims are opportunistic and parasitic,” a Yuga Labs spokesperson said in a statement to Variety. “We strongly believe that they are without merit, and look forward to proving as much.”
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