Celebrities Named in Suit Alleging Bored Ape Yacht Club NFT ‘Scheme’
A class action lawsuit alleges that stakeholders in Yuga Labs, the parent company of NFT series Bored Ape Yacht Club and its associated digital products, engaged in a celebrity conspiracy to defraud potential investors.
The complaint, filed Dec. 8 in federal district court in LA, names Yuga partners — including veteran music executive Guy Oseary — among the 37 defendants, which 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 left troubled cryptocurrency exchange FTX and served as a consultant and board member of 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 Varietya Yuga Labs spokesperson said, “In our view, these claims are opportunistic and parasitic. We strongly believe they are without merit, and look forward to proving it.”
Plaintiffs Adonis Real and Adam Titcher allege that by promoting or supporting the Bored Ape community through social media and other media, these entertainers and athletes caused the value of non-fungible tokens (NFTs) to “artificially inflated and distorted prices” and engaged in deceptive campaigns that did not disclose alleged financial compensation. The two also allege that the “scheme” involved MoonPay, which enabled transfers of ownership to the named celebrities, some of whom were endorsers of the service. One such investor named is Fallon, whose on-air namecheck of MoonPay as “the PayPal of the crypt” on a Nov. 11, 2021, episode with Mike Winkelmann, the digital artist known as Beeple, is quoted, as is a Jan. 24. 2022, appearance on “The Tonight Show” by Hilton.
Another prominent piece of advertising came in the form of an FTX teaser featuring Steph Curry carving an ice sculpture of a Bored Ape with the tagline: “When you learn about crypto, you’ll be anything but bored.”
The complaint says there are more than 103,000 unique account holders of Yuga papers — which include Bored Ape offshoot Mutant Ape Club; the “Otherside” metaverse, which offered virtual land sales; and the token ApeCoin – from which Yuga receives a 2.5% royalty rate “every time one of the NFTs is resold on the secondary market.”
The period specified in the class action is from April 24, 2021 to today. At its portfolio height in early 2022, Bored Ape NFTs fetched hundreds of thousands of dollars with what were considered rare properties. 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, especially since trading in such assets remains unregulated. Also affecting the market is the crypto crash that 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 misleading consumers to invest in the company.
The lawsuit against Yuga Labs and others was filed in the US District Court for the Central District of California, Western Division. The case is document no. 2:22-CV-08909-FMO-PLA. The plaintiffs are represented by the San Diego firm of Scott & Scott, who went public with his intention to create a class action lawsuit in July. In November, the firm also targeted, via a series of “investigative notices,” Warner Music Group, Live Nation, Beyond Meat and Poshmark, among others, for breach of fiduciary duty.
Last week, a class action lawsuit against Kim Kardashian, Floyd Mayweather and other celebrity promoters of EthereumMax was dismissed by a federal judge. According to a CNBC report, Judge Michael Fitzgerald of the Central District of California noted in his ruling, “While the law certainly places limits on these advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment.”
