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In brief: The Bored Ape Yacht club, the well-known series of non-fungible tokens (NFTs), has seen a class-action lawsuit filed against parent company Yuga Labs over claims it secretly paid celebrities to promote the NFTs, thereby artificially increasing the digital assets' prices.
Plaintiffs Adonis Real and Adam Titcher filed the suit in California district court on Friday. It alleges a conspiracy in which highly influential celebrities were discreetly paid to promote the Bored Ape Yacht Club NFTs to "artificially inflated and distorted prices." It's claimed that these misleading promotions did not disclose the celebrities' alleged payments.
"Defendants' promotional campaign was wildly successful, generating billions of dollars in sales and re-sales," wrote the plaintiffs' lawyers, and "at no point did any of the defendants register these securities with the SEC."
The dozens of celebrities named in the suit include Justin Bieber, Snoop Dogg, Serena Williams, Madonna, The Weeknd, Kevin Hart, DJ Khaled, Gwyneth Paltrow, Paris Hilton, Jimmy Fallon, and Steph Curry. It also names veteran music manager Guy Oseary, one of Yuga's partners.
It's also alleged that the MoonPay platform helped facilitate the scheme. MoonPay helps the rich and famous purchase NFTs without having to set up a wallet, buy crypto, then take custody of the token.
"In truth, 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," according to the lawsuit.
Fallon is cited as name-checking MoonPay as "the PayPal of crypto" on an episode of his talk show in November last year. Another episode in which both Fallen and Paris Hilton talk about Bored Ape NFTs is also highlighted.
The lawsuit seeks at least $5 million on behalf of the plaintiffs and the putative class of "all others similarly situated."
A Yuga Labs spokesperson said, "In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much."
Celebrities being named in suits for promoting digital assets is nothing new. Larry David was one of several named in a lawsuit against collapsed crypto exchange FTX. Elsewhere, Kim Kardashian and Floyd Mayweather were sued for promoting an alleged crypto pump and dump scheme in January.
The law could be on the side of Yuga Labs. In the similar lawsuit against Kardashian/Mayweather involving EthereumMax, filed by the same lawyer in the new Yuga Labs case, a federal judge dismissed it, saying investors must be expected to "act reasonably before basing their bets on the zeitgeist of the moment."
It was reported last month that the Bored Ape NFT Justin Bieber bought for $1.29 million in January had fallen in value to around $69,000.
Updated with statement from Yuga Labs