Lawsuit Hits Yuga Labs on Allegation of Swindling InvestorsJuly 30, 2022
A class action filed against Yuga labs claims it persuaded the community inappropriately to buy BAYC NFTs. The suit also claims the community was coerced to also buy AprCoin associated with Yuga Labs.
Getting the Case in Proper Perspective
The possible class action was filed by Scott+Scott legal firm on the 21st of July. It claimed that Yuga Labs inflated the value of its APE token and BAYC NFTs. The platform did so by employing the service of celebrities to endorse and promote it.
The suit equally claims that Yuga Labs led inexperienced investors on. They were urged to participate when the platform touted huge rewards and growth potential.
It also said the platform unveiled the ApeCoin to swindle investors. This was after selling fraudulently advertised NFTs worth millions of dollars.
The document also said retailers were left hanging with tokens that had lost 87% of their inflated value. It was allegedly found that the said growth depended on continuous marketing. This is against the idea of real utility or an accompanying technology.
The law firm is seeking investors who lost their funds to ApeCoin and BAYC NFTs. Especially in April and June this year. APE got to an all-time high of $26.70 in that timeframe before losing 82.5%.
The token dropped to $4.66 by the end of June. But its floor price fell from 151.5 ETH to 92.9 ETH.
The Community’s Reaction
The expected lawsuit does not seem to affect the neighborhood so much. A BAYC hodler tweeted on the 24 July that a lot of people are angry they were wrecked.
Another user also brought up the case that Yuga Labs did not create a token. It was ApeCoin DAO that created the token but was only adopted by the platform.
Other commentators stated that Apecoin collapsed after the airdrop to BAYC hodlers. It came at a time when the entire market was undergoing a serious downturn.
If the case gets heard by a court, it looks like Scott+Scott will have to prove Yuga Labs broke the law. It has to state how the employment of celebrities and paid adverts violated the law.
The law firm is alleging a pump and dump but it might be problematic to prove that. This is in consideration of Yuga Lab’s initiative’s strength.
“Pump and dump” is also known as the “rug pull.” It simply means that a project has given exaggerated expectations to the community and got abandoned.
ApeCoin and BAYC NFT were promoted as investments under unregistered security. Scott+Scott might have to make another case against their nature.