The YouTube group Nelk Boys is facing a lawsuit accusing them of deceiving investors and failing to deliver on promises related to their NFT project, MetaCard. According to the lawsuit filed on January 29 in a California federal court, the project’s founders, Kyle Forgeard and John Shahidi, allegedly sold 10,000 NFTs worth $23 million but did not fulfill the promised business initiatives and investment opportunities.
Plaintiff Trenton Smith claims that Nelk Boys, through their cryptocurrency company MetaCard, created the illusion of a promising project but only offered insignificant "bonuses." Among the promised benefits for MetaCard holders were discounts on branded clothing, access to a private event with Snoop Dogg, and a $250,000 giveaway. However, according to the lawsuit, investors did not receive the expected return on their investments.
MetaCard Price Collapses
The MetaCard NFT project launched in January 2022, with all tokens selling out within minutes. Each NFT cost $2.3K, but according to Smith, it "had no intrinsic value" except for the promised perks. As of now, according to OpenSea, the minimum price for MetaCard is 0.034 ETH (around $111), indicating a sharp decline in the asset's value.
Defense from Nelk Boys
Representatives of Full Send, the clothing brand associated with Nelk Boys, which is also named in the lawsuit, stated that over the years, several events for MetaCard holders were organized, offering them discounts and early access to merchandise. Additionally, investors were allegedly given the opportunity to participate in the Bored Jerky business.
"For those who didn’t want to continue with the project, we offered a public 30-day refund program for MetaCard NFTs with interest," said a company spokesperson, adding that the refund deadline was even extended for some investors.
What the Plaintiffs Demand
Smith is seeking compensation for damages, the return of illegally obtained funds, and payment of legal fees. As of the publication of this article, Nelk Boys had not provided an official comment on the lawsuit.
This case is another in a series of legal disputes against companies issuing NFTs. In September, users filed a lawsuit against OpenSea, claiming the platform was selling unregistered securities. Another high-profile case involves the American sports betting platform DraftKings, which reached a preliminary settlement with the National Football League Players Association (NFLPA) over the unlawful use of athletes' images in an NFT collection linked to the fantasy game Reignmakers.
NFLPA accused DraftKings of not paying for the licensing of football players' images, which led to the legal dispute. The parties have now notified a New York federal court of the settlement and requested a 60-day delay to finalize the deal. The final decision on the settlement will be made by Judge Analisa Torres, known in the crypto community for the SEC vs. Ripple case.
Meanwhile, the NFT market continues to decline: 2024 has become the worst year for sales volume and trading activity since 2020. More details on its current state and forecasts can be found here.
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