Proposed Class action accuses Yuga Labs of inappropriately inducing BAYC investors
A recent class-action lawsuit proposal alleged that Yuga Labs “inappropriately induced” the NFT community to purchase Bored Ape Yacht Club NFTs and its native token, ApeCoin (APE). On Thursday, a proposed class action brought by the legal firm Scott+Scott was published, alleging that Yuga Labs had inflated the BAYC NFTs and the APE token prices by using celebrity endorsers and promoters.
Allegations on Yuga Labs
Additionally, it claims that Yuga Labs pitched “unsuspecting investors” on the growth prospects and possibilities for massive profits on their investments. Moreover, the legal firm said that Yuga Labs went on to launch ApeCoin, after selling off “millions of dollars of fraudulently promoted NFTs” to further fleece investors. The class-action proposal reads:
“Once it was revealed that the touted growth was entirely dependent on continued promotion (as opposed to actual utility or underlying technology), retail investors were left with tokens that had lost over 87% from the inflated price high on April 28, 2022.”
Notably, APE climbed to an all-time high of $26.70 before plummeting by over 82.5 percent to $4.66 at the end of June, while the floor price decreased from 151.5 ETH to 92.9 ETH. The law firm is pursuing the affected investors who lost money on BAYC NFTs and Apecoin between April and June 2022.
If the lawsuit is ever heard in court, it appears that Scott+Scott will have to demonstrate that Yuga Labs and its celebrity sponsors violated the law by failing to disclose their paid marketing.
Pump and dumps, also known as rug pull, typically mean that a project has given community assets that have been exaggerated before completely leaving the initiative. In 2019, crypto exchange BitMax was accused of arranging pump and dump schemes to benefit from IEO projects. It later delisted the DEEP token after those accusations, as TheCoinRise reported.
Since Apecoin and BAYC NFTs were advertised as investment contracts under the heading of unregistered securities, the legal firm may have to make a critical case.
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