The suit claims that celebrities, which also include pop singer Madonna and socialite Paris Hilton, pumped up the value of the BAYC NFTs, encouraging buyers to purchase "losing investments at drastically inflated prices." (Related: Celebrity-endorsed NFTs lose value, leaving investors with virtually nothing.)
The main defendants are Yuga Labs Inc., the blockchain start-up behind the BAYC, Hollywood agent Guy Oseary and his cryptocurrency company, MoonPay USA LLC.
Also named in the suit are comedian Kevin Hart, professional tennis player Serena Williams, hip-hop artist Snoop Dogg, professional basketball player Stephen Curry, musicians Post Malone and The Weekend, Jimmy Fallon's production company Electric Hot Dog, Inc. and Universal Television. The suit claims that most, if not all of the above-mentioned celebrities were recruited by Oseary, who was paid by Yuga Labs for their endorsements through MoonPay.
Specific endorsements that were cited in the 94-page lawsuit include Hilton's appearance on Fallon's show on NBC where they both promoted BAYC NFTs, Hilton's follow-up promotion of the NFTs on her Twitter account and Madonna falsely claiming in an interview for a newspaper that she was upset over being beaten to a bid on a Bored Ape NFT.
Celeb endorsements artificially inflated NFT prices, causing investors to lose billions
The suit claims that the promotional campaign using actors, musicians, athletes and other celebrities was "wildly successful," generating billions of dollars in sales and re-sales of BAYC NFTs.
"The truth is that the Company's [Yuga Labs] entire business model relies on using insidious marketing and promotional activities from A-list celebrities that are highly compensated (without disclosing such), to increase demand of the Yuga securities by convincing potential retail investors that the price of these digital assets would appreciate," reads the class action suit.
"The manufactured celebrity endorsements and misleading promotions regarding the launch of an entire BAYC ecosystem (the so-called Otherside metaverse) were able to artificially increase the interest in and price of the BAYC NFTs during the relevant period, causing investors to purchase these losing investments at drastically inflated prices," continued the suit.
The main complaint of the lawsuit focuses on the fact that the above-mentioned celebrity endorsers and other Hollywood A-listers who promoted the NFTs did not disclose to potential investors that they were paid by Yuga Labs and Oseary to pump up sales and artificially inflate the price of BAYC NFTs.
The plaintiffs are seeking an unspecified amount in monetary damages.
Since the BAYC NFTs launched in late April 2021, trading volume for these NFTs has dropped by 93 percent. In a statement, a spokesperson for Yuga Labs claimed that the class action suit is baseless and should be dismissed.
"In our view, these claims are opportunistic and parasitic," said the spokesperson. "We strongly believe that they are without merit, and look forward to proving as much."
This class action suit is only the latest lawsuit to target celebrities for promoting digital financial products under false pretenses. At least three other investor suits have been filed against celebrities since early November.
These lawsuits have targeted celebrities, including socialite Kim Kardashian, comedian Larry David, retired professional boxer Floyd Mayweather Jr. and professional football player Tom Brady, alleging fraud over their endorsement either of a failed cryptocurrency exchange, a failed cryptocurrency token or other products or companies in the crypto industry.
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