The suit argues that celebrity promotion of crypto is "fraught with problems" — and it's claimed Yuga Labs was involved in a "vast scheme" to misleadingly promote and sell products.
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Gwyneth Paltrow, Justin Bieber, Serena Williams and Jimmy Fallon are among the A-listers facing a class action lawsuit for promoting Bored Ape Yacht Club NFTs.
The legal case aims to represent all investors who purchased non-fungible tokens released by Yuga Labs — as well as ApeCoin tokens.
A lengthy court filing made in California begins with a quote from an article in The Atlantic that says:
"Celebrities and NFTs are a match made in hell … Somehow, star endorsements have found a new low."
The court document argues that the celebrity promotion of cryptocurrencies is "fraught with problems" — and it's claimed that Yuga Labs was involved in a "vast scheme" with celebrities to misleadingly promote and sell its products.
It's alleged all of these stars — as well as others including Madonna, Paris Hilton, Kevin Hart and Mike Winkelmann — engaged in "manufactured" endorsements that artificially increased interest in Bored Ape NFTs, as well as their price.
Several companies are also listed as defendants — including Universal Television, adidas and MoonPay.
A flurry of tweets are included as evidence — both from the official Twitter account for Bored Apes and some of the celebrities who describe themselves as proud owners of these NFTs. The class action also includes records from block explorers, connecting the dots between certain transactions on the Ethereum network.
One particular incident highlighted in the class action concerns an interview that Jimmy Fallon performed with Paris Hilton on the Tonight Show, where both are accused of "misleadingly promoting" Bored Apes.
That clip has now received more than 500,000 hits on YouTube — and it's claimed viewers were given a "false impression that Hilton had been inspired to purchase a BAYC NFT after hearing that Fallon had organically purchased one of his own, when, in truth, the entire Tonight Show segment was just a paid promotion for the BAYC collection of NFTs and MoonPay."
Another damning allegation in the lawsuit centers on when Justin Bieber promoted his "purported" purchase of Bored Ape #3001 to 262 million followers on Instagram.
"Reports indicated that Bieber paid approximately $1.29 million for his Bored Ape purchase, which was upwards of five times the floor price with similar characters. But this gross overpayment was meaningless to Bieber since, upon information and belief, he did not actually pay any money of his own for this BAYC NFT, but rather received it through a series of transactions for the purpose of compensating him."
Elsewhere, it's claimed that Gwyneth Paltrow had failed to disclose through her posts that she was a backer of MoonPay "and had a financial interest in its success."
Other incidents highlighted in the lawsuit include an FTX advert that featured Steph Curry tending to an ice sculpture of a Bored Ape.
The success of this lawsuit would hinge upon proving that these celebrity endorsers deceived the public through their promotions — or were compensated for their involvement in secret.
Yuga Labs has denied the allegations and defended itself in a statement, saying:
"In our view, these claims are opportunistic and parasitic. We strongly believe that they are without merit, and look forward to proving as much."
The law firm Scott+Scott is involved in this latest legal action, and it has form when it comes to pursuing celebrities for their endorsement of cryptocurrencies.