A class action lawsuit filed Thursday accuses a host of celebrities of promoting Bored Ape Yacht Club (BAYC) non-fungible tokens at artificially increased prices without disclosing their financial stakes or personal interests, thereby misleading investors and violating both state and federal laws.
The suit details how celebrity promoters, allegedly engaged in “unlawful, unfair, and deceptive practices,” played a significant and lucrative role in a conspiracy engineered by Hollywood elites.
Fungible outrage
Deadline obtained a copy of the lawsuit, which names the leadership of Yuga Labs — the blockchain start-up company behind the BAYC NFTs — along with various executives and celebrities, including Madonna (Louise Ciccone), Paris Hilton, Jimmy Fallon, Justin Bieber, Gwyneth Paltrow, Serena Williams, Kevin Hart, Stephen Curry, and DJ Khaled.
The crypto-payments startup MoonPay was also named among the defendants.
The suit claims that Yuga Labs conspired with “highly-connected Hollywood talent agent” Guy Oseary and MoonPay to promote and sell a suite of digital assets.
Oseary signed a representation deal with Yuga Labs in October 2021. Madonna is another Oseary client.
According to the complaint, Yuga executives and Oseary together schemed to “leverage their vast network of A-list musicians, athletes, and celebrity clients and associates to misleadingly promote and sell the Yuga Financial Products.”
Their promotional campaign was “wildly successful, generating billions of dollars in sales and re-sales,” said the complaint.
“The manufactured celebrity endorsements and misleading promotions regarding the launch of an entire BAYC ecosystem … were able to artificially increase the interest in and price of the BAYC NFTs during the Relevant Period, causing investors to purchase these losing investments at drastically inflated prices,” it continued.
The lawsuit added that by “promoting the BAYC NFTs on their social media platforms and through their reported conduct, [the celebrities] provided assistance that was a substantial factor in causing the NAYC NFTs price to both surge and do so long enough to allow all Defendants to sell their BAYC NFTs for huge profits at the expense of their followers and investors.”
The value of these NFTs dropped significantly in May, bottomed out in August, and crashed again after the FTX collapse.
Cleaning out their adoring fans
Celebrities did not appear too keen to disclose that they were more than just BAYC customers. Deadline reported that, before the crash, celebrities like Jimmy Fallon publicly praised the Bad Ape NFTs, claiming to be customers themselves. Fallon, for instance, had done so on “The Tonight Show” in November 2021.
Paris Hilton, among the defendants, came onto Fallon’s show in January to join him in once again pushing the NFTs.
Paris Hilton Surprises ‘Tonight Show’ Audience Members By Giving Them Their Own NFTs | ‘Tonight Show’youtu.be
Celebrity promoters such as Fallon and Hilton allegedly received clandestine payments from Yuga Labs — an allegation Yuga Labs denies.
“In truth, the Executive Defendants and Oseary used their connections to MoonPay and its service as a covert way to compensate the Promoter Defendants for their promotions of the BAYC NFTs without disclosing it to unsuspecting investors,” said the suit.
Celebrity promoters are now accused of both aiding and abetting the scheme and civil conspiracy.
The defendants allegedly also violated the California Unfair Competition Law, the California Consumers Legal Remedies Act, the Exchange Act, and the Securities Act.
According to Decrypt, the plaintiff’s attorneys will have to prove that Yuga’s celebrity promoters engaged in unfair or deceptive practices when hawking the NFTs, but that proof of receipt of secret payouts through a clandestine operation would meet that standard.
Regardless of whether the celebrities are held to account, BAYC, already under SEC investigation, may be in hot water if it is found that its NFTs are, in fact, unregistered securities.
TheBlaze previously reported that consumer advocates and professional investors had expressed concern that celebrities were taking everyday Americans for a bad ride, prompting them to make poorly considered crypto investments.
Last month, a class-action lawsuit was filed naming a number of celebrity promoters including, again, Golden State Warriors basketballer Stephen Curry, as well as Larry David, Shaquille O’Neal, and others. The celebrities were reportedly compensated for promoting the now bankrupt FTX crypto exchange.
Curry had gone so far as to say “with FTX I have everything I need to buy, sell, and trade crypto safely.”