Published on: 12/12/2022
Yuga Labs sued for using celebrities to promote, sell NFTs
Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC), was sued on Friday in California District Court for not disclosing the alleged involvement of celebrities in promoting and selling NFTs.
Justin Bieber, Serena Williams, Jimmy Fallon, Kevin Hart, DJ Khaled, Gwyneth Paltrow, Madonna and Steph Curry allegedly have misled their followers into buying BAYC NFTs, causing buyers to purchase “losing investments at drastically inflated prices.”
According to the suit, these celebrities are members of an exclusive “club” formed by Hollywood talent agent Guy Oseary, Yugo Labs executives and the cryptocurrency exchange MoonPay.
“The Executive Defendants and Oseary used their connections to MoonPay and its service as a covert way to compensate the Promoter Defendants for their promotions of the BAYC NFTs without disclosing it to unsuspecting investors,” the lawsuit reads. Oseary, in particular, was allegedly linked to Bieber, Paltrow, and Hart through their early investments in MoonPay.
Fallon was accused of promoting Moonpay during an interview with web artist Matt “Beeple” Winklemann on a November 2021 Tonight Show episode. Bieber allegedly received a BAYC NFT worth approximately $1.3 million. On January 26, Paltrow announced to investors that she had “joined” the BAYC community and thanked MoonPay for facilitating her NFT purchase.
In the same month this year, other celebrities such as Kim Kardashian, Floyd Mayweather, Paul Pierce and Tom Brady were also involved in similar lawsuits for alleged fraud over their endorsement of EthereumMax.
The suit said that “billions of dollars” had been generated in sales and resales through celebrity endorsements, and the defendants had failed to register these securities with the Security Exchange Commission (SEC).
A Yuga Labs spokesperson said these allegations were baseless, and they looked forward to seeing them proven.
“In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much,” the spokesperson said.
BAYC’s trading volume has experienced a drop of 93 percent since its launch. The value of ApeCoin tokens has also dropped significantly, around 90 percent from an all-time high.
Bored Ape Yacht Club’s current plans
BAYC was founded by Wylie “Gordon Goner” Aronow, Greg “Gargamel” Solano, Kerem “Emperor Tomato Ketchup” Atalay and Zeshan “No Sass” Ali.
Aronow said he had wanted BAYC to be a Web3 version of the streetwear brand Supreme. The company has become one of the most successful NFT art collections, valued at more than 1$ billion. It has issued 10,000 NFTs depicting cartoon monkeys in different outfits.
The recent collapse of cryptocurrency, which led to the bankruptcy of FTX, motivates Yuga Labs to prove that Web3 can be successful and is the future.
“Yuga isn’t impacted by anything that’s happened directly, but what’s happened is horrible and I think hurts the entire industry,” Aronow said of FTX’s collapse. “This was something that a large portion of the space trusted, thought was a good guy, and now we’re seeing behind that mask, and it’s ugly.”
Yuga Labs is currently focusing on developing the Otherside metaverse. The platform is designed to work on web browsers, both PC and mobile, unlike Meta’s grandiose Horizon Worlds. However, Otherside will still enable players to just hang out, roam around and build, like Roblox and Minecraft.