The proposed class-action driven by law firm Scott+Scott was publicized on July 21, claiming that Yuga Labs utilized celebrity promoters and endorsements to “inflate the price” of the APE token and the BAYC NFTs.
It also mentions that Yuga Labs promoted the growth opportunities and chance for huge returns on investment to “unsuspecting investors.”
Once it was revealed that the glorified growth was completely 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 overblown price high on April 28, 2022, as per the lawsuit.
The law firm is pursuing impacted investors who suffered losses on BAYC NFTs and Apecoin between April and June of this year. During this period, APE surged to its all-time high of $26.70, before falling roughly 82.5% to $4.66 at the end of June, while the floor price went from down to 92.9 ETH which once stood at 151.5 ETH.
Reaction to Class-action Lawsuit against Yuga Labs
The community appears to be relatively unfazed by the proposed lawsuit, with BAYC holder @SoapBoxCar suggesting in a tweet that a group of people are mad as they bought at the top and “got rekt.”
Twitter user @briann6211 also pointed out an interesting aspect, he mentions that Yuga Labs never created a toke and Apecoin DAO created a token which was then adopted by the firm. Several members also noted that the Apecoin tanked after a free airdrop to BAYC holders, while the broader market was also suffering from an intense downturn at the time.
Ryder Ripps didn’t miss the opportunity and tweeted for maintaining his stance against the company.
If the lawsuit gets carried to court, it seems like Scott+Scott will need to prove that Yuga Labs and its celeb promoters failed to reveal their paid advertisements, as they are legally mandated to do so.
As the law firm is also asserting a pump and dump happened, it would need to prove that Yuga Labs contended in such practices, which may be challenging given the stability of Yuga Labs’ projects.
The nature of Apecoin and BAYC NFTs may also be deceptive, as the law firm may have to claim that they were promoted as investment contracts under the classification of unregistered securities.
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