A class-action lawsuit alleges that stakeholders from Yuga Labs, the parent company of the NFT series Bored Ape Yacht Club and related digital products, were involved in a celebrity conspiracy to defraud potential investors.
The lawsuit, filed Dec. 8 in federal district court in LA, names Yuga partners – including veteran music executive Guy Oseary – among the 37 defendants, including Kevin Hart, Gwyneth Paltrow, Madonna, Justin Bieber, Serena Williams and Jimmy Fallon, Paris Hilton, Snoop Dogg, The Weeknd, Post Malone and NBA star Steph Curry. Also named is Amy Wu, who recently exited struggling cryptocurrency exchange FTX and served as an advisor and board member of ApeDAO.
When asked by Variety, a Yuga Labs spokesperson said, “In our view, these claims are opportunistic and parasitic. We firmly believe they are unfounded and look forward to proving it.”
Plaintiffs Adonis Real and Adam Titcher allege that by promoting or supporting the Bored Ape community via social media and other media, these entertainers and athletes inflated the value of non-fungible tokens (NFTs) to “artificially inflated and distorted prices” and Engaged in misleading advertisements that failed to disclose purported monetary compensation. The two also claim that the “scheme” involved MoonPay, which facilitated the transfer of ownership to the named celebrities, some of whom were supporters of the service. One such named investor is Fallon, whose on-air name check is cited by MoonPay as “the PayPal of crypto” on a November 11, 2021 episode starring Mike Winkelmann, the digital artist known as Beeple, as was a Jan February 24 2022, appearance on Hilton’s The Tonight Show.
Another prominent promotion was a teaser commercial for FTX, in which Steph Curry shows an ice sculpture of a bored monkey with the slogan “If you learn about crypto, you will be anything but bored.”
The complaint states that there are more than 103,000 individual account holders of Yuga securities – including Bored Ape offshoot Mutant Ape Club; the Metaverse Otherside, which offered virtual land sales; and the token ApeCoin – from which Yuga receives a 2.5% royalty “every time one of its NFTs is resold on the secondary market”.
The time period specified in the class action is April 24, 2021 to date. At its portfolio peak in early 2022, Bored Apes made hundreds of thousands of dollars with characteristics considered rare. Plaintiff Titcher purchased a Mutant Ape and an Otherdeed for the Bored Ape Metaverse Otherside; According to the lawsuit, Real bought ApeCoin tokens.
Investing in NFTs is not without risk, especially as trading in such assets remains unregulated. The crypto crash that started in early summer and took another hit in November with the collapse of FTX is also impacting the market. A class action lawsuit filed Nov. 15 accused FTX’s celebrity “brand ambassadors,” including Larry David, Tom Brady, Giselle Bundchen, Shaquille O’Neal and Steph Curry, of misleadingly encouraging consumers to invest in the company .
The lawsuit against Yuga Labs and others has been filed in the US District Court for the Central District of California, Western Division. The case is Case No. 2:22-CV-08909-FMO-PLA.
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