Yuga Labs Could Face Class Action Suit Over 'Inflated' BAYC NFTs

According to the law firm Scott+Scott, the creator of the bored Ape Yacht Club, Yuga Labs, utilized celebrity endorsements to boost its NFTs.



Yuga Labs, the $4 billion firm behind the Bored Ape Yacht Club (BAYC) NFT collection, may face a class action lawsuit alleging that it unfairly increased the price of its crypto assets, causing investors to suffer significant losses.


According to law firm Scott+Scott, investors were "inappropriately encouraged" to purchase the company's NFTs and native coin ApeCoin.


Lawyers claim Yuga Labs exploited celebrity marketers and sponsorships to "inflate" the price of its NFTs by promising unrealistically large returns.


The BAYC collection is owned and supported by celebrities such as musician Snoop Dogg, football star Tom Brady, and influencer Paris Hilton, among others. The most expensive BAYC digital artwork was sold late last year for $3.4 million.


Prices for crypto assets and NFTs have recently fallen as a result of the broader financial market crisis.


According to NFT Stats, the average price of a BAYC NFT sold in the last seven days is presently $115,000, down from around $425,000 three months ago.


Along with its successful BAYC NFTs, Yuga Labs released ApeCoin on the Ethereum blockchain in March, to power its forthcoming metaverse environment.


However, Scott+Scott criticized the firm's decision to launch a community-focused coin.


According to the lawyers, "After selling off millions of dollars in fraudulently marketed NFTs, Yuga Labs developed ApeCoin to further defraud investors."


"Once it was clear that the stated growth was solely dependent on continuing promotion," they said, "retail investors were left with tokens that had lost more than 87 percent from the exaggerated price peak on April 28, 2022."


ApeCoin, which is listed on major exchanges like Coinbase, Binance, and Kraken, began trading on March 17 at $8.15.


On April 28, the token reached an all-time high of $26.70, a 200 percent increase. According to CoinGecko data, it has since fallen by more than 75% to $6.30 as of Monday at 4:40 a.m. ET.


Individual investors who suffered losses from Yuga Labs-related investments between April and June of this year are being invited to join a potential class action, according to Scott+Scott.


Pseudonymous critic Ryder Ripps, who is being sued by Yuga Labs for trademark infringement in a separate case, said he expects additional lawsuits to follow.


Others chastised the law firm for pursuing a case against Yuga Labs, with one claiming the investors "don't know how to hold."


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