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.
In the complaint, filed Dec. 8 in federal district court in L.A., Yuga partners — including veteran music manager Guy Oseary — are named among the 37 defendants, who include Kevin Hart, Gwyneth Paltrow, Madonna, Justin Bieber, Serena Williams, Jimmy Fallon, Paris Hilton, Snoop Dogg, The Weeknd, Post Malone and NBA star Steph Curry. Also named is Amy Wu, who recently exited troubled cyptocurrency exchange FTX and served as a consultant and board member of the ApeDAO.
The lawsuit seeks monetary damages of at least $5 million on behalf of the plaintiffs and the putative class of “all others similarly situated.”
Reached by Variety, a Yuga Labs spokesperson 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.”
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. 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 Nov. 11, 2021, episode featuring Mike Winkelmann, the digital artist known as Beeple, is cited, as is a Jan. 24, 2022, appearance on “The Tonight Show” by Hilton.
Another prominent piece of promotion came by way of an FTX teaser commercial featuring Steph Curry carving an ice sculpture of a Bored Ape with the tagline, “When learning about crypto, you’ll be anything but bored.”
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 is from April 24, 2021, to present. At its portfolio height in early 2022, Bored Ape NFTs were fetching in the hundreds of thousands of dollars with what were deemed rare characteristics. Plaintiff Titcher purchased a Mutant Ape and an Otherdeed for the Bored Ape metaverse Otherside, and Real purchased ApeCoin tokens, according to the lawsuit.
Investing in NFTs is not without risk, particularly as the trade of such assets remains unregulated. Also affecting the market is the crypto crash which began in early summer and saw another blow in November with the collapse of FTX. A class-action lawsuit filed Nov. 15 accused FTX celebrity “brand ambassadors” including Larry David, Tom Brady, Giselle Bündchen, Shaquille O’Neal and Steph Curry of deceptively encouraging consumers to invest in the company.
The lawsuit against Yuga Labs and others was filed in the U.S. District Court for the Central District of California, Western Division. The case is docket no. 2:22-CV-08909-FMO-PLA. The plaintiffs are represented by San Diego firm Scott & Scott, which went public with its intention to form a class action in July. In November, the firm also targeted, via a series of “investigation alerts,” Warner Music Group, Live Nation, Beyond Meat and Poshmark, among others, for breach of fiduciary duties.
Last week, a class action lawsuit against Kim Kardashian, Floyd Mayweather and other celebrity promoters of EthereumMax, was dismissed by a federal judge. Per a CNBC report, judge Michael Fitzgerald of the Central District of California noted in his dismissal, “While the law certainly places limits on those advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment.”
From Variety US
