Yuga Labs, the $4 billion company behind the Bored Ape Yacht Club (BAYC) NFT collection, could be sued by a group of investors who say the company inflated the prices of its crypto assets, causing them to lose a lot of money.
Last Thursday, the law firm Scott+Scott wrote that investors were “inappropriately induced” to buy the company’s NFTs (non-fungible tokens) and its native coin ApeCoin.
Lawyers say that Yuga Labs “inflate[d]” the price of its NFTs by overpromising high returns with the help of celebrity promoters and endorsements.
The rapper Snoop Dogg, football player Tom Brady, and socialite Paris Hilton are just some of the famous people who own or have endorsed the BAYC collection. Last year, the most expensive piece of digital art by BAYC was sold for $3.4 million.
Recently, the prices of crypto assets and NFTs have gone down along with the rest of the financial market. NFT Stats says that the average price of a BAYC NFT that was sold in the last week was $115,000. This is down from about $425,000 three months ago.
Along with its popular BAYC NFTs, Yuga Labs released ApeCoin on the Ethereum blockchain in March. Its purpose was to power the upcoming metaverse ecosystem, which is still in the works.
But Scott+Scott criticized the company’s decision to make a token for the community. Lawyers said that Yuga Labs launched ApeCoin to steal more money from investors after scamming them out of millions of dollars by selling NFTs.
They also said, “Once it became clear that the much-touted growth was entirely based on continued promotion (rather than actual utility or underlying technology), retail investors were left with tokens that had lost more than 87% of their value from the inflated price high on April 28, 2022.”
ApeCoin started trading on March 17 at $8.15. It is listed on the major exchanges Coinbase, Binance, and Kraken. On April 28, the token reached its all-time high of $26.70, which was a 200 percent jump. Since then, it has lost more than 75% of its value and is now worth $6.30 as of Monday, 4:40 a.m. ET, according to data from CoinGecko.
The Yuga Labs class action lawsuit would join the hundreds of other lawsuits about crypto.
Scott+Scott is now asking individual investors who invested in Yuga Labs between April and June of this year and lost money to join a possible class action.
Ryder Ripps, a critic who goes by a fake name and is being sued by Yuga Labs for trademark infringement in a separate case, said he thinks there will be more lawsuits.
Others said that it was wrong for the law firm to want to take on a case against Yuga Labs. One person said that the investors “don’t know how to hold.”
A case hasn’t been filed yet, but Scott+Scott would have to show that investors didn’t know about the risks or that they didn’t know that (allegedly) celebrities were being paid to promote the NFTs they owned.
Scott+Scott has offices all over the United States, as well as in London, Amsterdam, New York, and Berlin. If it were to happen, the company’s lawsuit would join a growing number of other lawsuits against cryptocurrency companies.