A group of four investors who invested in the popular NFT collection Bored Ape Yacht Club (BAYC) has filed a class action suit against the project’s creator, Yuga Labs, and 29 other companies for misleadingly promoting the collectibles as their prices continue to tumble.
According to a CNN report, other defendants mentioned in the lawsuit include art auction corporation Sotheby’s Holdings, sportswear giant Adidas, crypto payments firm MoonPay, and celebrities like Canadian singer Justin Bieber and American media personality Paris Hilton.
BAYC Investors Sue Yuga Labs and Others
The plaintiffs accused Sotheby’s of conniving with Yuga Labs to artificially inflate the prices of the BAYC NFTs. They described Sotheby’s 2021 sale of 100 collectibles to a single buyer for over $24 million as deceptive, arguing that Yuga Labs had recruited the auction house to ramp up hype and investors’ interest in the collection.
Bieber and Hilton, on the other hand, were accused of promoting BAYC without revealing their financial benefits from the project. Hilton’s representatives allegedly faked interest in the collectibles for financial gain.
Adidas allegedly conspired to artificially inflate the NFT prices via a scheme, and MoonPay was accused of engaging in market manipulation. The investors claimed that Yuga Labs secretly used MoonPay to settle their “celebrity cohorts” and, in turn, made interest in the BAYC collection seem organic rather than the result of a paid promotion.
Yuga Labs, Sotheby’s Refute Allegations
In response to the class suit, a spokesperson for Yuga Labs said the allegations were “without merit or factual basis.” Since the lawsuit is an amended version of a complaint lodged in December, the representative said it is “opportunistic,” just like the previous one.
“As a media and technology company, Yuga Labs has empowered strong communities of enthusiasts and entrepreneurs to innovate, connect, and build. Their creativity has fostered community-driven projects that have captured the imagination of people around the world. That’s the story worth telling,” the spokesperson said.
Sotheby’s called the allegations in the lawsuit baseless and revealed that it is prepared to defend itself in court.
The plaintiffs seek a jury trial and more than $5 million in damages.
Meanwhile, the prices of BAYC NFTs, once at their peak during the 2021 hype, have plummeted significantly in the past year. At writing time, the collection had a floor price of 25 ether ($42,700), down over 66% from a year ago, per data from CoinGecko.