The class action lawsuit claims that Yuga Labs leveraged a massive network of A-list athlete, celebrity, and musician clients to push the sales of their nonfungible token (NFT) collection.
Yuga Labs, the developer of the popular Bored Ape Yacht Club (BAYC) NFTs, together with crypto fintech Moonpay is now facing class action lawsuits over the allegations of using celebrities to promote and sell non-fungible tokens (NFTs) in a misleading manner.
The lawsuit has named up to 40 people and firms as defendants in this issue. It comprises top names like Justin Beiber, Snoop Dogg, Serena Williams, Paris Hilton, Jimmy Fallon, Post Malone, Diplo, and Madonna.
In that context, John T. Jasnoch of Scott+Scott Attorneys at Law LLP working in the Central District of California filed the class action lawsuit in the past week on December 8. Jasnoch said that crypto firms have been using their Hollywood network to promote cryptocurrency assets without complying with any set disclosure requirements. Moreover, the document added:
“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.”
Allegations On OpenSea And Oseary
The lawsuit claims that both Oseary and Yuga Labs set up a plan for leveraging a huge network of A-list athletes, celebrity clients and musicians. By doing that, they created a perception of “joining the club” using Yuga Labs’ premiering NFT collection.
This lawsuit insists:
“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 tastemakers was entirely manufactured by Oseary at the behest of the Executive Defendants”.
The class action lawsuit also describes the statement of the United States Securities and Exchange Commission (SEC) related to celebrity endorsements. According to the SEC:
“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”.
This class action was first proposed earlier this year in July. At the time, law company Scott+Scott stated that Yuga Labs used many celebrity endorsements to “inflate the price” of APE tokens and BAYC nonfungible tokens (NFTs). Yuga Labs has also been a part of a bigger investigation into the NFT markets by US watchdogs.
Notably, the regulators are also investigating where some of the NFTs sold by Yuga Labs is “akin to stocks” and if the sales would violate any federal laws.
