A class action lawsuit in the United States has been filed accusing a string of celebrities including Jimmy Fallon, Gwyneth Paltrow, Madonna, and Justin Bieber of peddling Bored Ape Yacht Club NFTs without making it clear that they had investments in Yuga Labs, the company behind the digital assets.
Some of those assets have plummeted in value. While the price of Bored Ape NFTs hit a record high of more than $434,000 in April, one BAYC NFT is now worth around $85,000, according to data from CoinGecko.
The lawsuit, which was filed in the U.S. District Court for the Central District of California, accused the celebrities involved of committing fraud by persuading amateur traders that the NFTs would increase in value.
“The company’s entire business model relies on using insidious marketing and promotional activities from A-list celebrities that are highly compensated (without disclosing such), to increase demand of the Yuga securities by convincing potential retail investors that the price of these digital assets would appreciate,” the complaint said.
Other celebrities named in the legal action include Kevin Hart, Snoop Dogg, and Serena Williams and her husband, Reddit cofounder Alexis Ohanian.
The lawsuit alleged that a November 2021 segment on NBC’s The Tonight Show saw host Jimmy Fallon reveal he had bought his first Bored Ape NFT through MoonPay—without any disclosure that he held a stake in the firm.
Plaintiffs accused the show of including a “paid advertisement for the BAYC collection of NFTs and MoonPay” that was masquerading as a “purportedly organic segment.”
Claimants also accused pop superstar Bieber of falsely claiming he purchased an NFT for $1.3 million. In reality, it was given to him in exchange for his promotion of Yuga Labs’ products.
According to reports, most of the celebrities endorsing Yuga Labs’ products were said to be recruited by talent manager Guy Oseary, who paid them through crypto firm MoonPay, in which he was an investor.
“Oseary, the MoonPay Defendants, and the Promotor Defendants each shared the strong motive to use their influence to artificially create demand for the Yuga securities, which in turn would increase use of MoonPay’s crypto payment service to handle this new demand,” court documents said.
“At the same time, Oseary could also use MoonPay to obscure how he paid off his celebrity cohorts for their direct or off-label promotions of the Yuga Financial Products.”
Yuga Labs was founded last year and quickly established itself as a key player in the NFT space, with its Bored Ape Yacht Club among its most popular collections.
The lawsuit filed on Thursday isn’t the first involving celebrities and digital assets, and previous cases have had mixed outcomes.
