NFT and crypto collectors suffered a setback in their class action against Yuga Labs, the company behind Bored Ape Yacht Club. The judge decided that the assets do not meet the criteria of securities, although the plaintiffs are allowed to file a new complaint by October 10.
The lawsuit was filed in 2022 by investors Adonis Real and Adam Titcher. They alleged that Yuga Labs, together with agent Guy Oseary and crypto platform MoonPay, artificially inflated demand for its products. According to their claims, the company promoted the Bored Ape NFT collection and the ApeCoin cryptocurrency as investments that were not registered as securities, using celebrities for marketing.
Among the defendants were Justin Bieber, Madonna, Paris Hilton, and others. The plaintiffs argued that their public statements misled buyers, since many celebrities received NFTs for free and were additionally compensated for promoting them.
Court’s Position
Judge Fernando Olguin reviewed the arguments of both sides and dismissed the case. The ruling stated that Yuga Labs’ assets did not pass the so-called “Howey Test,” which defines the characteristics of an investment contract.
Olguin agreed with the plaintiffs on only one point. This was not enough – the judge emphasized that other criteria were not met, and therefore BAYC NFTs and ApeCoin could not be considered securities.
The plaintiffs were given until October 10 to file a new, third version of their complaint.
The Bored Ape Yacht Club collection remains one of the most famous in NFT history, and ApeCoin continues to trade on the market as a separate token. However, the legal dispute over the status of these assets is still not over.
Read also:
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- U.S. Appeals Court Overturns $9 Million Award in Yuga Labs Case Against Artist Ripps
This post is for informational purposes only and is not advertising or investment advice. Please do your own research before making any decisions.