Yuga Labs And Moonpay Face The Class Action Lawsuit For Use Hollywood Celebrities In Misleading NFT Ads

BFT produced by Yuga Labs. (photo: twitter @ yugalabn)

JAKARTA - Yuga Labs, creator of the Bored Ape Yacht Club (BAYC) and crypto fintech Moonpay faced a class action lawsuit for allegedly using celebrities to misleadingly promote and sell nonfungible tokens (NFTs).

More than 40 people and the company are named as defendants in the lawsuit, including Paris Hilton, gelad Dog, Jimmy Fallon, Justin Bieber, Madonna, Serena Williams, Post Malone, and Diplo.

The group's lawsuit was filed on December 8 by John T. Jasnoch of lawyer Scott+Scott at Law LLP in Central District of California and claims crypto companies use its Hollywood network to promote digital assets without meeting disclosure requirements.

This case symbolizes this concern because it involves a large scheme between blockchain start-up firm Yuga Labs, Inc. ('Yuga'), a highly connected Hollywood talent agent (DeFendant Guy Oseary), and front operation (MoonPay), all of which are united for the purpose of promoting and selling a series of digital assets, as written in the lawsuit document quoted by Cointelegraph.

According to the lawsuit, executives at Yuga Labs and Oseary made plans to leverage a broad network of musicians, athletes, and clients of A-list celebrities, aiming to bring investor perceptions of "joining the club" through Yuga's flagship NFT collection.

The membership exclusivity of BAYC is entirely based on the inclusion and support of highly influential celebrities. But the claimed interest in, and support from, NFT BAYC by this well-known flavor maker is fully produced by Oseary at the behest of the Executive Defendant, accusing the lawsuit.

The two plaintiffs in the case of Adonis Real and Adam Titcher bought Yuga Labs' NFT collection between April 2021 until now. The group lawsuit also refers to a previous US Securities and Exchange Commission (SEC) statement regarding celebrity support, which claims this support may violate the law if they do not disclose the nature, source, and amount of compensation paid, directly or indirectly, by the company in exchange for the ratification.

The claims are opportunistic and parasitic. We firmly believe that they are inappropriate, and hope to prove as much as possible, a spokesman for Yuga Labs told Cointelegraph.

As reported by Cointelegraph, the class action was first proposed last July, when law firm Scott+Scott claimed Yuga Labs used celebrity support to "increase the price" of BAYC NFT and APE. APE tokens, seeking to identify the harmed investors.

Yuga Labs is also part of a broader investigation into the NFT market by US regulators. The report shows the SEC is investigating Yuga Labs regarding whether certain NFTs are "more like stocks" and whether their sales violate federal law.