Bored Ape Yacht Club, a popular series of unique NFT tokens, has faced a class action lawsuit filed against its parent company, Yuga Labs. The plaintiffs allege that the company secretly paid celebrities to promote NFTs, thereby artificially inflating the prices of digital assets.
Adonis Real and Adam Thatcher filed the lawsuit in California District Court on Friday. It alleges a conspiracy in which highly influential celebrities were covertly paid to promote NFT Bored Ape Yacht Club at “artificially inflated and distorted prices.” It is alleged that these misleading promotions fail to disclose alleged celebrity payments.
“Defendants’ advertising campaign was extremely successful, generating billions of dollars in sales and resales,” the plaintiffs’ attorneys wrote, “and none of the defendants ever registered these securities with the SEC.”
The dozens of celebrities named in the lawsuit include Justin Bieber, Snoop Dogg, Serena Williams, Madonna, The Weeknd, Kevin Hart, DJ Khaled, Gwyneth Paltrow, Paris Hilton, Jimmy Fallon and Steph Curry. He also points to music industry veteran Guy Osiri, one of Yuga’s partners.
The MoonPay platform is said to have helped streamline the scheme. MoonPay helps the rich and famous buy NFTs without the need to create a wallet, buy cryptocurrency, and then deposit the token.
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“Defendants and Osiri used their ties to MoonPay and its services as a secret way to compensate the Promoter Defendants for their promotion of NFT BAYC without disclosing it to unsuspecting investors,” the lawsuit states.
In an episode of his talk show last November, Fallon called MoonPay “the cryptocurrency PayPal.” Another episode featuring Fallon and Paris Hilton talking about NFT Bored Ape is also highlighted.
The lawsuit seeks to withhold $5 million from the defendants on behalf of the plaintiffs and “all other similarly situated persons.”
A spokesperson for Yuga Labs said: “We believe these claims are opportunistic and parasitic. We firmly believe they are unfounded and look forward to proving it.”
Celebrity names appearing in lawsuits to promote digital assets is nothing new. Larry David was one of several participants in the lawsuit against the bankrupt crypto exchange FTX. In another case, Kim Kardashian and Floyd Mayweather were sued for promoting an alleged crypto pumping and dumping scheme in January.
The law may be on Yuga Labs’ side. In a similar lawsuit against the Kardashians and Mayweather involving EthereumMax, filed by the same lawyer in the new Yuga Labs case, a federal judge dismissed it, saying investors should “act wisely before basing their bets on the zeitgeist.”
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Source: TechSpot
