Madonna, Justin Bieber, Paris Hilton and others accused of fraud in star-studded NFT lawsuit

A number of A-list celebrities – including Madonna, Justin Bieber, DJ Khaled, Paris Hilton, Gwyneth Paltrow, Snoop Dogg, Serena Williams and Jimmy Fallon – have been accused of fraud in a class action lawsuit targeting their endorsement of the Bored Ape Yacht Club NFTs (non-fungible tokens).

On December 8, New York-based Scott + Scott Attorneys at Law filed a complaint on behalf of plaintiffs Adam Titcher and Adonis Real alleging that Yuga Labs, best known for its Bored Ape Yacht Club (BAYC) NFT collection, unfairly infringed competition laws by encouraging celebrity marketing of their digital goods. The suit also accuses the long list of star defendants – ranging from Paris Hilton to Madonna – of accepting compensation for their undisclosed promotion using crypto-trading app Moonpay as an intermediary.

According to the plaintiffs, Yuga Labs executives conspired with Moonpay and Hollywood talent manager Guy Osearyrepresenting Bored Apes, to obtain illegal celebrity endorsements, artificially inflate the value of BAYC NFTs and inspire investors to board a sinking ship.

“The defendants’ advertising campaign was highly successful, generating billions of dollars in sales and resales,” official court documents state. “The manufactured celebrity endorsements and deceptive promotions … were able to artificially increase interest in and price of the BAYC NFTs … causing investors to purchase these losing investments at drastically inflated prices.”

The Scott + Scott team has collected a wealth of evidence. In November 2021, for example, Moonpay posted a clip of Post Malone’s music video for the song One right now, where the artist is seen purchasing a BAYC NFT via the MoonPay app. The post was captioned “this happened,” suggesting coincidence, despite the artist being transferred the equivalent of $1.4 million in Ether a month prior. On November 11, 2021, Jimmy Fallon promoted Moonpay and the BAYC collection by mentioning that he bought his first NFT through the crypto firm, without disclosing his financial stake in the company. The suit alleges that Justin Beiber received a BAYC NFT worth $1.3 million in exchange for an Instagram post indicating that it was purchased with his own funds.

This lawsuit comes on the heels of a sector-wide bear market in the NFT and cryptocurrency industry, triggered by the FTX bankruptcy, a multi-billion dollar sales decline and a steadily declining number of unique NFT wallets. While BAYC NFTs remain one of the most profitable and recognizable crypto-assets, trading volume is still down nearly 50% from its January 2022 peak and 90% from launch. In a statement to The Hollywood ReporterA spokesperson for Yuga Labs called the claims “opportunistic and parasitic“.

A similarly starry NFT lawsuit was dismissed last week by a federal judge. Kim Kardashian, Larry David, Tom Brady and others had been accused of misleading their social media followers into buying EthereumMax tokens, inflating the NFT’s value before selling their holdings. Judge Michael Fitzgerald agreed that the lawsuit raised “legitimate concerns” but ultimately found that investors had to accept personal responsibility for “basing their bets on the zeitgeist of the moment.”