Yuga Labs, the creator behind the popular Bored Ape Yacht Club NFTs and ApeCoin, is likely to face a class-action lawsuit for promoting the digital collectibles as securities with guaranteed returns. Over the last three months, the BAYC NFTs and ApeCoin fell significantly in value.
An official complaint hasn’t been filed in the federal court yet as Scott+Scott, the law firm, is still in the preliminary stage of seeking plaintiffs who suffered losses from April to June in association with the purchase of Yuga-backed NFTs and tokens.
Yuga Labs has also been alleged of promoting the growth prospects and chance for huge returns on investment to unsuspecting investors. It’s stated that Yuga Labs launched the ApeCoin to further fleece investors after selling off millions of dollars of fraudulently promoted NFTs. The lawsuit highlighted that it was stated that the touted growth was entirely dependent on continued promotion, retail investors were left with tokens that had lost 87% from the inflated price high on April 28, 2022.
ApeCoin, during the time frame, surged to its all-time high of $26.70 before dropping off 82.5% to $4.66 at June end; the floor price went from 151.5 ETH down to 92.9 ETH. A user in support of Yuga Labs stated that it never created a token. In fact, ApeCoin DAO created a token that was adopted by the firm. It should be noted that ApeCoin tanked after a free airdrop to BAYC holders when the broader crypto market was also suffering from a sharp downturn at the time.
Some enthusiasts believe that Scott+Scott need to prove that Yuga Labs and its celebrity promoters failed to disclose their paid advertisements as they are legally required to do so. The law firm also claims that a pump and dump occurred. However, it needs to prove that Yuga Labs engaged in such practices.