Yuga Labs And Moonpay Face Class-Action Lawsuit For Promoting NFTs
Reports said that Yuga Labs, creators of Bored Ape Yacht Club (BAYC) and crypto fintech Moonpay are facing a class-action lawsuit for allegedly using celebrities to misleadingly promote and sell nonfungible tokens (NFTs).
It has been reported that 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.
However, the class-action was filed on December 8 by John T. Jasnoch of Scott+Scott Attorneys at Law LLP in the Central District of California and claims the crypto companies used its Hollywood network to promote the digital assets without complying with disclosure requirements.
The document stated:
“This case epitomizes these concerns as it involves a vast scheme between a blockchain start-up company, Yuga Labs, Inc. (‘Yuga’), a highly connected Hollywood talent agent (Defendant Guy Oseary), and a front operation (MoonPay), who all united for the purpose of promoting and selling a suite of digital assets.”
The report said that according to the lawsuit, executives at Yuga Labs and Oseary created a plan to leverage a vast network of A-list musicians, athletes, and celebrity clients, aiming to bring to investors the perception of “joining the club” through Yuga’s flagship NFT collection.
The suit alleged:
“The exclusiveness of BAYC membership was entirely based on the inclusion and endorsements of highly influential celebrities. But this purported interest in, and endorsement of, the BAYC NFTs by high-profile taste makers was entirely manufactured by Oseary at the behest of the Executive Defendants.”
Likewise, the two plaintiffs in the case Adonis Real and Adam Titcher purchased Yuga Labs NFTs collections between April 2021 to the present. The class-action also refers to a previously United States Securities and Exchange Commission (SEC) statement about celebrity’s endorsements, claiming “these endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”
A spokesperson for Yuga Labs said:
“The claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much.”
As reported, the class-action was first proposed in July, when the law firm Scott+Scott claimed Yuga Labs used celebrity endorsements to “inflate the price“ of the BAYC NFTs and the APE token, attempting to identify harmed investors.
Thus, Yuga Labs is also part of a wider investigation into the NFT market by US regulators. Reports show the SEC is investigating Yuga Labs over whether certain NFTs are “more akin to stocks” and whether their sale violates federal laws.