According to a planned class-action complaint, Yuga Labs “inappropriately persuaded” the community to purchase nonfungible tokens (NFTs) for the Bored Ape Yacht Club and the project’s associated ApeCoin (APE) token.
On Thursday, a proposed class action brought by the legal firm Scott+Scott was released, alleging that Yuga Labs had “inflated the price” of the BAYC NFTs and the APE token by using celebrity endorsers and promoters.
“After selling off millions of dollars of fraudulently promoted NFTs, YUGA LABS launched the Ape Coin to further fleece investors.”
Additionally, it claims that Yuga Labs sold “unsuspecting investors” on the growth prospects and potential for enormous profits on their investments.
ApeCoin growth was purely due to Yuga Labs promotion, states the lawsuit
“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 lawsuit stated
Affected investors who lost money on BAYC NFTs and Apecoin around April and June of this year are being sought by the law firm.
APE reached an all-time high of $26.70 over this period before falling around 82.5 percent to $4.66 at the end of June, while the floor price decreased from 151.5 Ether (ETH) to 92.9 ETH.
If the action is ever heard in court, it means that Scott+Scott will have to demonstrate that Yuga Labs and its celebrity sponsors violated the law by failing to disclose their sponsored marketing.
Given the strength of Yuga Labs’ initiatives and the fact that the law firm is also alleging a pump and dump incident, it may be challenging to demonstrate that Yuga Labs engaged in such tactics.
At the time of writing, APE is currently trading at $6.52. Over the last 30 days, APE had shown notable growth with 44.2% and 36.2% in the last 30 and 14 days. Over the last 7 days, APE has also spiked by 30.2%.