The proposed class-action lawsuit alleges that Yuga Labs “wrongly incited” the community to purchase Bored Ape Yacht Club’s non-fungible tokens (NFTs) and the project’s affiliated ApeCoin (APE) token.
Proposed class action managed law firm Scott+Scott published on July 21, alleging that Yuga Labs used promoters and celebrity endorsers to “jack up the price” of BAYC NFT and the APE token.
It also alleges that Yuga Labs was promoting growth prospects and the chance of a huge return on investment for “unsuspecting investors.”
“Following the sale of millions of dollars worth of fraudulently promoted NFTs, YUGA LABS launched Ape Coin to further defraud investors.”
“Once it was revealed that the advertised growth was entirely dependent on continued promotion (as opposed to actual utility or underlying technology), retail investors were left with tokens that lost over 87% from the inflated April 28, 2022 price high,” reads the post. message. added.
The law firm is currently looking for affected investors who suffered losses from BAYC NFT and Apecoin between April and June of this year.
During this time, APE jumped to its all-time high of $26.70 before dropping by about 82.5% to $4.66 at the end of June, with the price floor dropping from 151.5 Ether (ETH) to 92.9 ETH .
So there’s a class action lawsuit against @yugalabs because investors were “inappropriately lured into buying financial products made by Yuga Labs.”
— Kevin Wu (@kevwuzy) July 24, 2022
The community appears to be relatively unfazed by the proposed legal action, with BAYC hodler @SoapBoxCar suggesting via Twitter on July 24 that a group of people are angry that they bought upstairs and “got rekt”.
User @briann6211 also highlighted an interesting point: Yuga Labs “never created a token… Apecoin DAO created a token that was then accepted” by the firm. Several participants also noted that Apecoin fell after the free giveaway to BAYC holders, while the broader market was also suffering from a slump at the time.
Ironically, South Labs never created a token… Apecoin DAO created a token that was then adopted by Yuga Labs.
— Brian (@briann6211) July 24, 2022
If the lawsuit ends up going to court, it looks like Scott+Scott will have to prove that Yuga Labs and its famous promoters failed. disclose their paid advertising, as they are required by law to do so.
Since the law firm also claims that there was a pump and dump, it will need to prove that Yuga Labs used this practice, which can be difficult given the strength of Yuga Labs projects.
Pump and dump, or pulling the rug, usually implies that the project has dumped artificially inflated assets into the community before abandoning the project entirely.
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The nature of Apecoin and BAYC NFTs can also be tricky, as a law firm may have to claim they were promoted as investment contracts in the unregistered securities category.
Cryptooshala has reached out to Yuga Labs for comment on the proposed legal action, but has yet to receive a response from the company.
Credit : cointelegraph.com