Yuga Labs and Moonpay are facing a lawsuit over their promotion of celebrities’ non-fungible tokens. The plaintiffs in the case allege that the companies used celebrities to mislead the public in an aggressive promotion campaign to inflate the perceived value of their NFTs to sell for a profit.
It’s no surprise that we are now in an NFT bear market. These economic market conditions could get worse as legal repercussions are deemed necessary by some. In this report, we’ll look at the allegations against Yuga Labs and Moonpay, as well as how this may affect the crypto landscape.
Details About The Allegations
The accused parties were said to have conspired to create an influencer marketing campaign that involved many high-status celebrities. Although this form of marketing isn’t illegal in itself, the lack of disclosure is misleading. Without proper disclosure, the public is misled into believing that these celebrities organically joined the NFT communities.
The lawsuit further claims that these companies did not disclose the compensation they received for their services and instead profited from selling NFTs at rates far above market value, which barred potential buyers from investing transparently.
In addition, the lawsuit also alleges that Yuga Labs and Moonpay were parasitic in their approach to an inclusive industry, taking advantage of promising new technology for their own benefit. Paris Hilton, Jimmy Fallon, and Justin Bieber are just a few of the 40 names mentioned as defendants in the case. On December 8, John T. Jasnoch of Scott+Scott Attorneys at Law LLP filed a class-action lawsuit in the Central District of California.
During the bull run, Jimmy Fallon interviewed various guests on his show, including Paris Hilton. During one of the interviews, Fallon stated that he was an official investor in the NFT project. However, it is blurred if he was self-motivated or working in cooperation with Yuga Labs and Moonpay to enrich themselves. This is just one example of how celebs may or may not have been working with these companies to increase the value of their NFTs.
Moonpay is caught up in that allegation because they were the crypto fintech company that operated and facilitated the payments of these NFTs. It’s to be determined if Moonpay was aware of any undisclosed payments, but they will likely be questioned as part of the investigation.
Another alleged participant in the scandal is the well-connected Hollywood agent, Guy Oseary. He will be a defendant in this case and his network is associated with the quick spread of non-disclosed celebrity interest that flooded social channels.
These are the main parties involved in the lawsuit and more details will be released as the case progresses. If all parties are found to violate the law, they could be liable for damages as a result. With the broader economic environment in a state of distress and crypto winter progressing, more bad press is bound to follow any court proceedings.
Yuga Labs and Moonpay: Are They Guilty?
Although a verdict is yet to be determined, the lawsuit has sparked conversations about the legality of influencer marketing campaigns within the crypto space. If an investor is not properly informed of financial participation from celebrities or influencers, it is not ethical.
The lawsuit claims that Yuga Labs and Moonpay did not properly disclose to buyers any incentive payments they received as a result of their NFT promotions. This is a violation of US Securities and Exchange Commission (SEC) regulations. The SEC requires companies to disclose all financial incentives when selling securities, which is why the case may be pursued.
Yuga Labs is one of the leading NFT brands, responsible for the rise of The Bored Ape Yacht Club. During the bull run of 2021, this NFT collection made mainstream news as celebrities were seen sporting their PFP NFTs as one of these characters.
However, without proper disclosure, others began to “Ape” into these projects not realizing that the hype and collector’s value were manipulated from the start. Although this is a clever way to influence public perception, it can be damaging to the reality of the situation.
For now, it’s up to the court of public opinion to decide on the fate of the brand’s long-term success. Despite the aggressive marketing with (alleged) non-disclosed adverts, a community of Bored Apes was formed and there are some interesting developments with the project.
If public interest disperses and a lawsuit ensues, Yuga Labs may have difficulties finding the same level of success it once had when there was an army of celebs promoting the project.
How This May Affect The Crypto Landscape
The lawsuit against Yuga Labs and Moonpay could set a precedent for other blockchain companies to provide transparent disclosure of their activities.
The crypto space has been notoriously lacking in transparency and this could be an opportunity to put policies into place that will help protect investors from shady marketing practices. With increased regulation and awareness, it’s becoming increasingly difficult to be inactive in such matters as cryptocurrency projects can no longer get away with unapproved promotional tactics.
The consequences of such actions are enormous and could result in significant financial losses for all involved parties. In addition, the case could also bring attention to new regulatory policies that need to be implemented to protect investors.
This may also create a sense of distrust for NFT projects in general as investors may be wary of their involvement in the space. If one of the largest NFT brands (Bored Ape Yacht Club) could create a buying frenzy in such a short amount of time through malicious activities, then what’s to say that other projects won’t do the same?
This lawsuit against Yuga Labs and Moonpay serves as a reminder to all stakeholders that transparency is key when it comes to investing and promoting cryptocurrencies or NFTs.
It’s also important to ensure that any promotional activities are compliant with SEC regulations, as well as other governing bodies. If these companies are found guilty, it could open the door to increased oversight and regulations in the crypto space.