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19 December 20222 minute read

Yuga Labs and dozens of celebrities named in federal lawsuit alleging Bored Apes are unregistered securities

A lawsuit filed on December 8, 2022, in the federal district court for the Central District of California aims to hold dozens of A-list celebrities responsible for promoting the sale of multiple digital assets created by defendant Yuga Labs.

The assets include premier NFT collection Bored Ape Yacht Club (BAYC), metaverse property Otherdeeds, and cryptocurrency ApeCoin. The 100-page complaint alleges that Yuga Labs and elite talent agent Guy Oseary conspired to promote Yuga Labs' digital assets through Oseary’s Hollywood connections.

According to the plaintiffs, the digital assets were all unregistered securities sold in violation of Sections 5 and 12 of the Securities Act. The complaint further alleges that Oseary, whose VC firm invested in crypto onboarding service MoonPay, used the platform to buy high-value NFTs and covertly compensate Oseary’s network of celebrities in exchange for promotional placements in music videos, fashion, and late-night TV segments.

In addition to Yuga Labs' NFTs, the plaintiffs also direct allegations at the company’s related fungible offering. According to the plaintiffs, once the "scheme" to "shill" BAYCs proved successful, Oseary and executives at MoonPay conspired with Yuga Labs to launch a new cryptocurrency called ApeCoin. The defendants allegedly set up a decentralized and "mostly-anonymous" governance structure called ApeCoin DAO to support ApeCoin. The plaintiffs claim they were induced to purchase ApeCoin based on promises that it would be the primary currency for an ecosystem of Yuga Labs products and experiences. They assert those promises were misleading and accuse the defendants of dumping the token on retail investors while attempting to shield themselves behind a DAO structure.

In total, the complaint asserts ten causes of action including violations of California consumer protection laws, civil conspiracy, and violations of the Securities Act. In addition to Yuga Labs, Oseary and the celebrity defendants, the complaint also names a major TV studio, an international fashion brand, and prominent members of the ApeCoin DAO. If the case moves forward, it would be only the latest to wade into a thicket of challenging legal questions surrounding NFTs, fungible utility tokens, and legal status of DAOs.