Prestigious auction house Sotheby’s, along with a slate of high-profile celebrities including Madonna, Paris Hilton, and Justin Bieber, are being sued over their involvement with the Bored Ape Yacht Club (BAYC) non-fungible tokens (NFTs).
Defunct FTX bought over 100 Bored Apes at Sotheby’s auction?
According to The Times, the lawsuit arises from allegations that these celebrity endorsements artificially inflated NFT values, leading to significant financial losses for investors. Sean Masson from Scott+Scott, the law firm representing the Bored Ape investors, elaborated:
“The Sotheby’s stamp of approval played a big part in the deceptive promotion of the NFT collection as a legitimate investment.”
A major point of contention is Sotheby’s September 2021 auction. This event, taking place on their metaverse platform, saw 101 Bored Ape NFTs being auctioned off for an astonishing £24.4 million ($51.7m), exceeding estimated values of $20-30m.
However, the controversy spiked post-auction when Max Moore, a Sotheby’s associate, claimed on social media that a traditional (non-crypto) buyer secured the NFTs. Contrary to this claim, the lawsuit alleges that the true buyer was the now-defunct crypto exchange FTX. Such a representation, the plaintiffs argue, “misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience.”
Both companies denied the market manipulation charges. Sotheby’s stated: “The allegations in this suit are baseless, and Sotheby’s is prepared to defend itself vigorously.” Yuga Labs also refuted the claims, branding them “completely without merit or factual basis.”
The BAYC collection once reigned supreme over the NFT scene. Nowadays, it’s struggling to maintain its value and status. Additionally, other collections by parent company Yuga Labs are also struggling during this crypto winter.
Some celebrities, eager to distance themselves from the controversy, have clarified their stances. Representatives for Jimmy Fallon, for example, have reiterated his limited engagement with BAYC, simply owning a Bored Ape and mentioning it on his show.
As the lawsuit unfolds, stakeholders and the global NFT community are left to wonder: will this be the defining case that shapes the future of digital art endorsements and investments? If successful, this lawsuit could make set a huge precedent for celebrities and influencers promoting pump-and-dump projects.