Sotheby’s, a renowned fine arts auction firm, has been dragged into a class-action lawsuit filed by investors of Bored Ape Yacht Club (BAYC), a popular nonfungible token (NFT) collection. The investors claim that Sotheby’s helped the creators of BAYC, Yuga Labs, to deceive the public and inflate the prices of the NFTs.
The Class-Action Lawsuit Against Yuga Labs and Celebrities
On Dec. 10, 2023, a group of BAYC investors filed a class-action lawsuit against over 40 defendants, including Yuga Labs and celebrities like Post Malone, Justin Bieber, and Paris Hilton.
The lawsuit alleged that Yuga Labs and the celebrities were able to “artificially increase” the prices of the NFTs through celebrity promotions.
BAYC is a collection of 10,000 unique NFTs that depict cartoon apes with different traits and accessories. The NFTs also grant their owners access to exclusive benefits such as merchandise, events, and a virtual yacht club.
BAYC launched in April 2021 and quickly became one of the most sought-after NFT collections in the market.
However, the investors claim that Yuga Labs misled them about the origin, rarity, and value of the NFTs. They also accuse Yuga Labs of engaging in insider trading, market manipulation, and fraud.
They allege that Yuga Labs paid celebrities to endorse and promote BAYC without disclosing their financial interests or relationships with the company.
The investors are seeking damages, restitution, and injunctive relief from the defendants. They are also asking the court to declare BAYC as securities and subject them to regulatory oversight.
The Involvement of Sotheby’s in the Controversy
In a new development, Sotheby’s has been named in an amendment to the lawsuit. The investors allege that the auction house helped Yuga Labs “deceptively promote” BAYC to the public.
On Sept. 10, 2021, Sotheby’s auctioned 101 BAYC NFTs which generated over $24 million in sales. According to the plaintiffs, the auction house’s 2021 NFT auction allegedly helped make Yuga Labs look legitimate and misled the investors.
However, the auction house reportedly said in a statement to mainstream media outlet CNN that the allegations are “baseless.” Sotheby’s also added that they are prepared to “vigorously defend” their company.
In the same report, Yuga Labs also echoed Sotheby’s sentiments.
According to the BAYC creators, the new allegations are completely “without merit or factual basis.” The company also described the complaint as “opportunistic.”
Another Lawsuit Involving Yuga Labs Settled Earlier This Year
Meanwhile, another lawsuit involving Yuga Labs was settled earlier this year. On Feb. 7, 2023, the NFT company settled a lawsuit against a developer involved in the selling of a copycat NFT collection called RR/BAYC.
Yuga Labs and the developer Thomas Lehman agreed on a permanent injunction prohibiting the latter from using any similar BAYC imagery or operating social media pages that insinuate any association with Yuga Labs.
RR/BAYC was a collection of 10,000 NFTs that resembled BAYC but with different colors and backgrounds. The collection was launched in January 2023 and attracted some buyers who thought they were purchasing genuine BAYC NFTs.
However, Yuga Labs quickly noticed the similarity and filed a lawsuit against Lehman for trademark infringement and unfair competition.
The settlement put an end to the legal dispute between Yuga Labs and Lehman and prevented further confusion among potential buyers.
