Law firm Scott+Scott alleges that Yuga Labs promoted a chance at huge returns on investment to “unsuspecting investors.”
A proposed class-action lawsuit alleges that Yuga Labs
“inappropriately induced” the community to buy Bored Ape Yacht Club
non-fungible tokens (NFTs) and the project’s affiliated ApeCoin (APE)
token.
The proposed class-action driven
by law firm Scott+Scott was published on July 21, claiming that Yuga
Labs used celebrity promoters and endorsements to “inflate the price” of
the BAYC NFTs and the APE token.
It also alleges that Yuga Labs
promoted the growth prospects and chance for huge returns on investment
to “unsuspecting investors.”
“After selling off millions
of dollars of fraudulently promoted NFTs, YUGA LABS launched the Ape
Coin to further fleece investors.”
“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,” it added.
The law firm is currently
seeking impacted investors who suffered losses on BAYC NFTs and Apecoin
between April and June of this year.
During this timeframe, APE
surged to its all-time high of $26.70, before dropping roughly 82.5% to
$4.66 at the end of June, while the floor price went from 151.5 Ether
(ETH) down to 92.9 ETH.
So there's a class action lawsuit against @yugalabs as investors were "inappropriately induced to buy financial products created by Yuga Labs".
— Kevin Wu (@kevwuzy) July 24, 2022
Extremely ridiculous Take responsibility for your own actions people. https://t.co/WeuVVLNGv6 pic.twitter.com/7c9Jywvv9V
The community seems to be relatively unfazed by the proposed lawsuit,
with BAYC hodler @SoapBoxCar suggesting via Twitter on July 24 that a
bunch of people are mad they bought at the top and “got rekt.”
User
@briann6211 also highlighted an interesting point in that Yuga Labs
“never created a token… Apecoin DAO created a token which was then
adopted” by the firm. Several members also noted that the Apecoin tanked
after a free airdrop to BAYC holders, while the broader market was also
suffering from a sharp downturn at the time.
Ironically yuga labs never created a token… Apecoin DAO created a token which was then adopted by Yuga Labs
— Brian (@briann6211) July 24, 2022
If the lawsuit eventually gets taken to court, it appears that Scott+Scott will need to prove that Yuga Labs and its celebrity promoters failed to disclose their paid advertisements, as they are legally required to do so.
As
the law firm is also claiming a pump and dump occurred, it would need
to prove that Yuga Labs engaged in such practices, which may difficult
given the strength of Yuga Labs' projects.
Pump and dumps, or rug pulls usually imply that a project has dumped artificially inflated assets on a community before abandoning the project altogether.
Related: ApeCoin price eyes 45% rally following Otherside metaverse demo
The
nature of Apecoin and BAYC NFTs may also be tricky, as the law firm may
have to argue that they were promoted as investment contracts under the
category of unregistered securities.
Cointelegraph has reached out to Yuga Labs for comment on the proposed lawsuit, but is yet to hear back from the company.
source link : https://cointelegraph.com/news/yuga-labs-inappropriately-induced-bayc-investors-class-action
