Law Firm is Trying to Organize Class Action Lawsuit Against Yuga Labs
USA-headquartered law firm Scott+Scott is trying to organize a class-action suit against Yuga Labs, the entity behind popular non-fungible token (NFT) collections Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Otherside.
The lawsuit will argue that Yuga Labs "inappropriately" promoted BAYC and ApeCoin (APE), the collection’s native Ethereum (ETH) token, "inducing" investors to buy these "financial products," while both the collection's floor price and the token's value have slumped over the last three months, according to an announcement from the firm.
BAYC's floor price was at ETH 153 in early May. However, the collection's floor price has since plunged to ETH 87, dropping by around 45%, per nftpricefloor.com. Considering that ETH has also taken a hit over the past couple of months, BAYC's floor price has taken even a harder hit in terms of USD.
"The YUGA LABS leadership used celebrity promoters and endorsements to inflate the price of the company’s NFTs and token, by generally [promoting] the growth prospects and change for huge returns on investment to unsuspecting investors," the announcement said.
It added that after selling millions of dollars worth of "fraudulently promoted NFTs," the company launched ApeCoin "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," the statement argued.
Notably, the investors seem to have not yet filed an official complaint in a federal court. Instead, Scott+Scott is working to assemble plaintiffs who suffered losses after the purchase of Yuga Labs' NFTs or tokens.
"Yuga Labs individual investors are now joining together through a class action brought by law firm Scott+Scott, to seek restitution for losses incurred from the purchase of YUGA LABS tokens and NFTs," said the company.
Meanwhile, some users noted that those who have incurred losses after purchasing Yuga Labs-related NFTs or tokens might join the suit in order to reimburse their losses.
"I predict yuga holders will join actions like these to recover the funds they were swindled out of.. unless of course they hate money?" artist Ryder Ripps said in a tweet.
At 9:50 UTC on Monday morning, APE traded at USD 6.37, down 3.7% in a day and up 27% in a week. It is also down 76% since its April 2022 all-time high.
Just earlier this month, another class-action suit filed in California federal court accused major parties in the Solana (SOL) ecosystem, including Solana Labs, the Solana Foundation, and Solana co-founder Anatoly Yakovenko, among others, of violating securities law by launching unregistered security.
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