The veteran law firm Scott+Scott handles the class-action lawsuit, with details published in a recent memo. According to the legal team, Yuga Labs lured unsuspecting investors to part ways with hard-earned funds by using celebrity promoters “to inflate the price of the NFTs and tokens.”
“After selling off millions of dollars of fraudulently promoted NFTs, Yuga Labs launched the Ape Coin to further fleece investors,” read the law firm’s memo. “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,” it added.
The aggrieved parties are seeking restitution for the losses suffered as a result of purchasing BAYC NFTs between April and June, while still leaving the window open for affected parties to join the suit.
Between April and June, APE reached its peak of $26.70, but the market’s carnage sent prices falling to dizzying lows of less than $5. In the same time frame, the values of the BAYC collection hit rock bottom of 92 ETH from highs of 151.5 ETH.
Yuga Labs built a buzz around it after acquiring CryptoPunks and Meebits and successfully raised $450 million in a funding round led by venture capital firm Andreessen Horowitz. Several celebrities have purchased BAYC collectibles, including Post Malone, Stephen Curry, Serena Williams, and Justin Beiber.
The community remains unbothered
BAYC’s community remains unphased by the impending legal battle facing the creators. Community members took to Twitter to tease the aggrieved parties for being mad that they “got rekt” for buying the top.
“Extremely ridiculous! Take responsibility for your own actions, people,” said Kevin Wu.
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
Other community members poked holes in the claims by saying that Yuga Labs were not the makers of ApeCoin; rather, it was the creator of the ApeDAO. The law firm faces a steep legal hill as it is saddled with the burden of proving that Yuga Labs enlisted the help of celebrities.
Industry pundits have insinuated that proving Yuga Labs engaged in a classic pump-and-dump scheme may end up being an uphill task given the reputation of Yuga Labs’ projects. Scott+Scott still has a trick up its sleeve and may argue in court that APE and the NFTs were being passed off as investment contracts without the Securities and Exchange Commission (SEC) approval.
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