A class-action lawsuit contends that stakeholders in Yuga Labs, the parentcompany of NFT series Bored Ape Yacht Club and its affiliated digitalproducts, engaged in a conspiracy with celebrities to defraud potentialinvestors.
In the complaint, filed Dec. 8 in federal district court in LA, Yuga partners— including veteran music manager Guy Oseary — are named among the 37defendants, who include Kevin Hart, Gwyneth Paltrow, Madonna, Justin Bieber,Serena Williams, Jimmy Fallon, Paris Hilton, Snoop Dogg, The Weeknd, PostMalone and NBA star Steph Curry. Also named is Amy Wu, who recently exitedtroubled cyptocurrency exchange FTX and served as a consultant and boardmember of the ApeDAO.
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The lawsuit seeks monetary damages of at least $5 million on behalf of theplaintiffs and the putative class of “all others similarly situated.”
Reached by variety , a Yuga Labs spokesperson said, “In our view, theseclaims are opportunistic and parasitic. We strongly believe that they arewithout merit, and look forward to proving as much.”
Plaintiffs Adonis Real and Adam Titcher claim that in promoting or endorsingthe Bored Ape community through social media and other mediums, theseentertainers and athletes caused the value of non-fungible tokens (NFTs) toballoon to “artificially inflated and distorted prices” and engaged inmisleading promotions that did not disclose alleged financial compensation.The two also allege that the “scheme” involved MoonPay, which facilitatedtransfers of ownership to the celebrities named, some of whom were backers ofthe service. One such investor named is Fallon, whose on-air name-check ofMoonPay as “the PayPal of crypto” on a Nov. 11, 2021, episode featuring MikeWinkelmann, the digital artist known as Beeple, is cited, as is a Jan. 24,2022, appearance on “The Tonight Show” by Hilton.
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Another prominent piece of promotion came by way of an FTX teaser commercialfeaturing Steph Curry carving an ice sculpture of a Bored Ape with thetagline, “When learning about crypto, you’ll be anything but bored.”
The complaint states that there exist more than 103,000 unique account holdersof Yuga securities — which includes the Bored Ape offshoot Mutant Ape Club;the metaverse “Otherside,” which offered virtual land sales; and the tokenApeCoin — of which Yuga receives a 2.5% royalty rate “every time one of itsNFTs is resold on the secondary market.”
The period specified in the class action is from April 24, 2021, to present.At its portfolio height in early 2022, Bored Ape NFTs were fetching in thehundreds of thousands of dollars with what were deemed rare characteristics.Plaintiff Titcher purchased a Mutant Ape and an Otherdeed for the Bored Apemetaverse Otherside, and Real purchased ApeCoin tokens, according to thelawsuit.
Investing in NFTs is not without risk, particularly as the trade of suchassets remains unregulated. Also affecting the market is the crypto crashwhich began in early summer and saw another blow in November with the collapseof FTX. A class action lawsuit filed Nov. 15 accused FTX celebrity “brandambassadors” including Larry David, Tom Brady, Giselle Bündchen, ShaquilleO’Neal and Steph Curry of deceptively encouraging consumers to invest in thecompany.
The lawsuit against Yuga Labs and others was filed in the US District Courtfor the Central District of California, Western Division. The case is docketno. 2:22-CV-08909-FMO-PLA. The plaintiffs are represented by San Diego firmScott & Scott, which went public with itsintentionto form a class action in July. In November, the firm also targeted, via aseries of “investigation alerts,” Warner Music Group, Live Nation, Beyond Meatand Poshmark, among others, for breach of fiduciary duties.
Last week, a class action lawsuit against Kim Kardashian, Floyd Mayweather andother celebrity promoters of EthereumMax, was dismissed by a federal judge.Per a CNBC report, judge Michael Fitzgerald of the Central District ofCalifornia noted in his dismissal, “While the law certainly places limits onthose advertisers, it also expects investors to act reasonably before basingtheir bets on the zeitgeist of the moment.”
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