Non-Fungible Tokens (NFTs) were one of the most popular forms of crypto assets in the past bull market. Halas they are now more and more in the news as target for lawsuits. A new case accuses celebrities of generating hype.
Yuga Labs sued
Last Friday, attorneys for Scott+Scott filed a class action lawsuit against Yuga Labs in California District Court. This is the company behind the Bored Ape Yacht Club NFTs.
The charge of no less than 100 pages describes 37 suspects who would have caused hype in the NFT market. Among the suspects are top Yuga Labs executives, as well as a large number of celebrities. This would have indirectly hired Yuga Labs to promote the popular NFTs. Among the names mentioned are Justin Bieber, Madonna, Paris Hilton, Serena Williams and NFT artist Mike Winkelmann (Beeple).
Yuga Labs would use another company to secretly compensate the celebrities for promoting it, MoonPay. Madonna’s representative, Guy Oseary, would be one of the investors in this company. He allegedly persuaded celebrities in Hollywood to promote the NFTs for a fee. It is illegal to do this in secret, which is considered market manipulation.
Not the first lawsuit for creators BAYC
The run-up to a new lawsuit already started last summer, but Scotts+Scotts needed hard evidence against Yuga Labs. MoonPay seems to be an important part of this as it makes it clear that the payments would be hidden.
The prosecutors also cite the SEC’s investigation. In it, the SEC argues that the Bored Ape NFTs are in reality unregistered securities (such as stocks). The buyers would expect a return on their NFTs. Certainly last year they changed owners for enormous amounts of money.
Opinions on Yuga Labs’ chances are divided. According to some, the tokens are clearly securities, but according to others, the creators simply had the growth of the market in mind. In any case, the SEC’s investigation opens the doors to even more lawsuits against publishers of NFTs.