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Justin Bieber, Paris Hilton sued over Bored Ape NFTs

NFT yuga labs bored ape bayc

Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) collection, is on the receiving end of a class action lawsuit on account of allegedly misleading statements provided about its growth prospects. With the crypto crash, the value of BAYC NFTs and ApeCoin tokens have dropped significantly. Other named defendants include celebrities Justin Bieber, Paris Hilton, Madonna, Serena Williams, and Jimmy Fallon and as well as promoter Guy Oseary and adidas, which had a marketing relationship with BAYC.

“In our view, these claims are opportunistic and parasitic,” said a Yuga Labs spokesperson. “We strongly believe that they are without merit, and look forward to proving as much.”

Clamping down on potential securities violations, the U.S Securities and Exchange Commission (SEC) has reportedly been investigating Yuga Labs, amongst other companies. 

Earlier in October, the SEC issued charges against Kim Kardashian for her promotional post on EthereumMax tokens. Kardashian agreed to pay $1.26 million as settlement charges and cooperate with the SEC’s ongoing investigations. “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities”, said SEC Chair Gary Gensler.

Gensler regards most cryptocurrencies as securities, but it raises a deeper question on whether digital assets like NFTs must be subject to the same disclosures as securities. Plain vanilla NFTs are considered as collectibles. But there are three reasons why some NFTs can be classed as securities. The first is where fractions of an NFT are sold because the fractions start to look like shares. The other two risk factors are providing a passive income or if the NFT can be used for governance.

But apart from NFTs, there is also the ApeCoin cryptocurrency token. The SEC has previously issued statements urging caution around celebrity-backed initial coin offerings. According to the statement, the failure by celebrities to disclose information on compensation received for promotions violates securities laws. 

The recent FTX collapse has encouraged further scrutiny of celebrity endorsements as part of wider investigations into the crash. The probe by the Texas State Securities Board follows a lawsuit issued in Florida against Steph Curry and Tom Brady – alleging that the endorsements take advantage of investors.

Image Copyright: Yuga Labs