NFT buyers sue Justin Bieber, Madonna and Bored Ape Yacht Club founders over alleged ‘scheme’ to Bilk investors
There is a cartoon on the homepage of the Bored Ape Yacht Club, once the hottest collection of NFTs on the Ethereum blockchain, of a bar decked out in sailor gear. The venue has festive lighting and kitsch decorations, but it is empty, everyone has left the party. It’s a fitting image for the group of 10,000 rogue monkeys whose value and buyers have plummeted in recent months.
Now Yuga Labs, creator of Bored Ape Yacht Club and owner of CryptoPunks and Meebits, is facing legal action over allegations that it deliberately inflated the value of its NFTs to benefit insiders.
Two Yuga Lab NFT collectors, Adonis Real and Adam Titcher, filed a class-action lawsuit on December 8 in the Federal Central District Court of California alleging that Yuga Labs made paid celebrity endorsements appear organic, artificially inflating prices and resulting in billions of dollars within sales and resale. When prices fell after Bored Ape Yacht Club’s lackluster metaverse rollout, Real and Titcher lost out.
More generally, the complaint alleges that Yuga Labs violated the Securities Exchange Act “by making false and misleading statements about Yuga’s growth prospects, financial ownership and financial benefits to securities investors in Yuga,” wrote Scott and Scott, the law firm that filed the suit. statement.
Specializing in securities fraud and consumer rights litigation, Scott and Scott has brought a number of crypto- and metaverse-related cases in recent months, including against Safemoon, LGB Coin, and TerraForm Labs. On December 8, a judge in California dismissed the lawsuit against EthereumMax, involving Kim Kardashian and Floyd Mayweather, due to insufficient allegations. The firm did not respond to a request for comment.
Among the 37 defendants named in the case are high-profile figures including Madonna, Justin Bieber, Stephen Curry, Serena Williams, Jimmy Fallon, and the progenitor of the NFT boom himself, Mike Winkelmann – aka Beeple – whose NFT collection Every day: The first 5,000 Days sold for $69 million in March 2021.
The lawsuit, which seeks at least $5 million in damages on behalf of its plaintiffs, identifies longtime talent manager Guy Oseary and MoonPay, described by some as the PayPal of crypto, as central entities in the “scheme.” Oseary, the allegation alleges, worked with Yuga executives to leverage his network of A-list celebrities and get them to promote Bored Ape Yacht Club and Yuga financial products in exchange for financial compensation delivered through MoonPay. Oseary was an early investor in MoonPay via his venture capital firm, Sound Ventures.
The compensation, it said, was not disclosed and therefore violates the FTC requirement that endorsers disclose their material connections with their sponsoring advertisers in clear and obvious language.
An example from the 95-page filing involves Jimmy Fallon’s promotion of the Bored Ape Yacht Club and MoonPay on an episode of his Show tonight. On air, Fallon said he had purchased a monkey through MoonPay’s services and continued to promote the pair on Twitter without acknowledging that he was an early investor in MoonPay and was “financially interested, directly or indirectly, in the increased sales or popularity of the Yuga. securities.”
At the time of writing, neither celebrity had publicly commented on the lawsuit, though Yuga Labs told Artnet News in a statement, “in our view, these claims are opportunistic and parasitic. We strongly believe they are without merit, and look forward to proving the.” The company declined to comment further on the allegations.
The lawsuit follows reports in October that the SEC was investigating Yuga Labs to determine whether its offerings constitute unregulated securities.
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