Bored Ape Yacht Club fans are frustrated at the price decline in their non-fungible tokens (NFTs). One company is capitalizing on this frustration, looking to pit these investors against the collection’s creator, Yuga Labs. In a market already chock full of lawsuits, new litigation is coming to the fore of the blockchain world. This new proposed claim alleges the company fraudulently pumped the value of its ape NFTs.
For the last year, Bored Apes have been easily the largest and most polarizing topic in the NFT world. As NFT faithful wax poetic of a world that fully embraces blockchain technology, digital artists and crypto entrepreneurs alike have been conducting fast cash grabs by minting anything remotely artistic. Yuga Labs seriously caught lightning in a bottle with the Bored Ape collection, though. Its series of monkey pictures has become a multi-billion dollar enterprise — one of the largest collections in the world.
Yuga Labs is capitalizing on the success of the NFTs with a number of other collections, as well as a new metaverse space that’s generating an even greater trading volume than the apes themselves. It’s also grabbed the attention of a legion of celebrity endorsers. Snoop Dogg, Tom Brady, Madonna, Justin Bieber — these celebrities and dozens more have driven up the prices of the tokens through their own Bored Ape purchases.
Of course, plenty of naysayers have existed this whole time. People like Molly White, creator of the satirically titled “Web3 Is Going Great,” have been slamming the NFT space over its purely speculative value and the lack of any sort of practical use case presented by the current market. With a class-action lawsuit now in the works, one law firm is trying to turn holders against the project with this same line of thinking.
Bored Ape Yacht Club Lawsuit Accuses Yuga Labs of Fraud
It is not a stretch to say the current going rate for Bored Apes is frazzling owners. Indeed, average sale prices have dropped from nearly $500,000 per token in late April to just over $120,000 today. But now, a law firm is looking to take Yuga Labs to court over it. A suit proposal invites holders to sign onto a class-action lawsuit. However, there are some factors at play that the legal team doesn’t recognize, or gets flat out wrong.
Law firm Scott+Scott is the company looking to go after Yuga Labs. The firm claims that Yuga has exploited celebrity endorsements to artificially pump the prices of Bored Ape tokens. The firm also cites the downturn in token prices since April. It accuses Yuga Labs of keeping hidden the speculative nature of Bored Ape investments. Specifically, the firm says “once it was revealed that the touted growth was entirely dependent on continued promotion,” the tokens had lost 87% of their value.
The claim goes on to also attack ApeCoin (APE-USD), the official token of the Bored Ape ecosystem. It says Yuga Labs made the token after allegedly defrauding investors of millions in order to “further fleece them.”
Of course, there’s plenty of flawed logic playing into this suit. First of all, ApeCoin is not a product of Yuga Labs. An organization of Bored Ape fans launched the token on their own. Yuga Labs adopted it as an official currency after the fact. And as CoinTelegraph points out, the accusations that Yuga Labs conducted a pump and dump through the tokens are quite thin. Yuga actively supports and upkeeps the project to this day.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.