According to rumors, the famous company that created NFT collection Bored Ape Yacht Club, Yuga Labs, to face a lawsuit from a group of investors for selling securities that had no guaranteed returns.
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Allegations against Yuga Labs
Yuga Labs could be accused of unauthorized sales of financial assets.
“Yuga Labs investors were improperly induced to purchase financial products created by that company, namely Ape Coin and Bored Ape Yacht Club Non-Fungible Tokens (“NFTs”). YUGA LABS management used promoters and celebrity endorsements to drive up the price of the company's NFTs and tokens, generally promoting growth and change for huge ROI for unsuspecting investors”.
This is the text of a class action lawsuit allegedly filed by a famous Los Angeles law firm Scott & Scott against the creators of the famous NFT collectibles Bored Ape Yacht Club .
The lawsuit will argue in court that investors were misled by a company that promised returns that were never delivered. The lawsuit would still be in a preliminary stage, and the law firm is said to be gathering referrals from investors.
A key question underlying the chances of success of this class action against Yuga, once filed, will be whether a court will rule that NFTs can be considered securities, similar to stocks. If a court finds that the NFT BAYCs are securities, Yuga Labs would be in breach of the necessary disclosure and registration obligations arising from the securities offering.
It has been the subject of several lawsuits filed by the SEC against companies in the industry in the past two years. The latest is the long-running lawsuit with Ripple from December 2020, which so far seems to be resolved favorably for the crypto company.
ApeCoin main cause of class action
According to the indictment, the company used sponsors and famous faces to convince investors to buy NFTs and the ApeCoin coin, which allegedly lost up to 87 % of its value in a matter of months.
However, it will be difficult for a court to consider NFTs as securities, it is easier for a lawsuit to succeed if it only concerns the ApeCoin token.
The company is still waiting for another process. In late June, Yuga Labs sued Bored collection artist Ryder Ripps for confusing investors. The lawsuit accuses Ripps and other artists of minting and selling identical copies Bored Apes and using misleading information to appear legitimate.
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