Last Thursday, plaintiffs who lost money on Yuga Labs Inc.’s non-fungible tokens (NFTs) and ApeCoin digital tokens sued the company, its executives, related entities and their directors, and more than a dozen celebrity promoters including Paris Hilton, Jimmy Fallon, Justin Beiber, and Serena Williams over the digital currencies’ meteoric crash. The 95-page lawsuit says the defendants swindled the public into buying these assets by egregiously overselling their value.
The scheme was allegedly the result of coordinated efforts by 2021-founded NFT project Yuga Labs, highly-connected Hollywood talent agent and defendant Guy Oseary, and a front operation called MoonPay. “The executives at Yuga and Oseary together devised a plan to leverage their vast network of A-list musicians, athletes, and celebrity clients and associates to misleadingly promote and sell the Yuga Financial Products,” the class action says.
The lawsuit details the endorsements made by celebrities, including staged transactions, promotions on live television, and social media posts, mainly of Yuga’s flagship NFT collection, the Bored Ape Yacht Club (BAYC). Allegedly, to make promotion and interest in BAYC NFTs appear “organic,” MoonPay, touted as “a white-glove service designed to help the super-rich and celebrities buy NFTs,” was used as a covert way to compensate the promoters without disclosing it to unsuspecting investors.
Further, the lawsuit says the wild success of the BAYC NFTs did not last long, and the collection’s floor price began to deflate right after the failed launch of the BAYC metaverse and botched sale of virtual land in its metaverse project “Otherside,” on April 30. After that, trading volume of both the BAYC NFTs and ApeCoins dropped more than 90% and their prices correspondingly cratered, the suit says.
The plaintiffs claim unwitting investors lost millions while the defendants profited handsomely from their scheme. The complaint states eleven claims for relief for civil conspiracy, under California’s business practice and consumer protection laws, as well as for violations of the federal Securities Act for failing to register the ApeCoin as a security.
The plaintiffs and putative nationwide class are represented by Scott + Scott Attorneys at Law and Zigler Law Group LLC.
In a statement provided to Law Street Media, a Yuga Labs spokesperson commented on the case. “In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much.”
