Yuga Labs, Moonpay Face Lawsuit Over Celebrity NFT Promotion

Yuga Labs, the creators of Bored Ape Yacht Club (BAYC) and crypto fintech Moonpay are facing a class action lawsuit for allegedly using celebrities to deceptively promote and sell non-fungible tokens (NFTs).

Over 40 people and companies are named as defendants in the lawsuit, including Paris Hilton, Snoop Dog, Jimmy Fallon, Justin Bieber, Madonna, Serena Williams, Post Malone and Diplo. The class-action lawsuit was filed on December 8 by John T. Jasnoch of Scott+Scott Attorneys at Law LLP in the Central District of California and alleges that the crypto companies used their Hollywood networks to market the digital assets without complying with disclosure requirements. The document says:

“This case demonstrates these concerns as it involves an elaborate scheme between a blockchain startup company, Yuga Labs, Inc. (‘Yuga’), a highly connected Hollywood talent agent (defendant Guy Oseary), and a front operation (MoonPay), all of which colluded for the purpose of marketing and selling a variety of digital assets.”

According to the lawsuit, executives at Yuga Labs and Oseary created a plan to leverage a large network of A-list musicians, athletes and celebrity clients, aiming to give investors the perception of “joining the club” through Yuga’s flagship NFT collection.

“The exclusivity of BAYC membership was based solely on the inclusion and endorsement of highly influential celebrities. However, this purported interest in, and endorsement of, the BAYC NFTs by high-profile tastemakers was entirely manufactured by Oseary at the behest of the executive defendants,” claims the lawsuit.

Related: Yuga Labs Acquires Beeple’s 10KTF Game, Hints at Metaverse Integration

The two plaintiffs in the case, Adonis Real and Adam Titcher, purchased Yuga Lab’s NFT collections between April 2021 and the present day. The class action also refers to a previous statement by the United States Securities and Exchange Commission (SEC) regarding celebrity endorsements, claiming that “those endorsements may be illegal if they do not disclose the nature, source, and amount of compensation paid, directly or indirectly, by the company in exchange for the endorsement.”

A spokesperson for Yuga Labs told Cointelegraph that “the claims are opportunistic and parasitic. We strongly believe they are without merit and look forward to proving it.”

As reported by Cointelegraph, the class action was first proposed in July, when law firm Scott+Scott claimed Yuga Labs used celebrity endorsements to “inflate the price” of the BAYC NFTs and APE (APE) token, in an attempt to identify harmed investors.

Yuga Labs is also part of a broader investigation into the NFT market by US regulators. Reports indicate that the SEC is investigating Yuga Labs over whether certain NFTs are “more akin to stocks” and whether their sales violate federal laws.

Moonpay did not immediately respond to Cointelegraph’s requests for comment.