TLDR
- Judge dismisses class action against Yuga Labs and celebrities for NFT promotion.
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Celebrities like Justin Bieber and Paris Hilton were accused of inflating NFT prices.
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Court ruled Bored Ape NFTs weren’t securities under federal law.
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Plaintiffs have until Oct. 10 to amend their complaint in the ongoing case.
A federal judge dismissed a class action lawsuit that accused Yuga Labs and a group of high-profile celebrities of colluding to artificially inflate the price of Bored Ape Yacht Club (BAYC) NFTs. The lawsuit, filed in 2022 by two investors, claimed that Yuga Labs and several celebrities, including Justin Bieber, Paris Hilton, and Madonna, violated securities laws by promoting the NFTs without proper registration.
The plaintiffs argued that the celebrities, who were often paid or given NFTs for free to endorse the collection, misled the public into viewing these NFTs as lucrative investments. However, U.S. District Judge Fernando Olguin ruled that the plaintiffs failed to meet the legal standard needed to classify these digital assets as securities. His ruling clears the defendants, including the celebrities, from any liability in this case.
Plaintiffs Accused Yuga Labs and Celebrities of Collusion
The plaintiffs, Adonis Real and Adam Titcher, alleged that Yuga Labs worked with Hollywood talent agent Guy Oseary and MoonPay, a platform for buying and selling cryptocurrencies, to boost the value of BAYC NFTs. They argued that the celebrities were compensated or given NFTs for free in exchange for promoting the assets to their followers.
This, they claimed, was a violation of federal and state securities law, as the NFTs were sold without proper regulatory filings.
In their complaint, the plaintiffs argued that the celebrities’ promotion of the NFTs misled investors into thinking they were valuable assets. However, Judge Olguin disagreed with this view, stating that the plaintiffs did not meet the necessary legal requirements for classifying these digital assets as securities. This means that the celebrities and Yuga Labs were not found to be in violation of securities law.
Court Finds NFTs Do Not Qualify as Securities
Judge Olguin based his decision on the Howey Test, which is used to determine whether an asset qualifies as a security. The test requires three criteria to be met: an investment of money, a common enterprise, and an expectation of profits derived from the efforts of others.
While the judge acknowledged that the plaintiffs showed an expectation of profits from others’ efforts, they failed to meet the other necessary requirements to prove the NFTs were securities.
“Despite satisfying this sub-prong, the plaintiffs have failed to satisfy the other Howey prongs and therefore fail to allege that any, some, or all of defendants’ digital assets are a security,” Judge Olguin stated in his ruling. As a result, the lawsuit was dismissed, and the court gave the plaintiffs until October 10, 2025, to amend their complaint and address the deficiencies in their legal argument.
What’s Next for the Plaintiffs and Defendants?
The plaintiffs now have until October 10 to file a third amended complaint, which will likely focus on clarifying the allegations related to securities laws. If they fail to meet the legal criteria again, the case may be dismissed permanently.
As for the celebrities and Yuga Labs, they have been cleared of the securities violations in this lawsuit, but the legal process is not over.
Representatives for the defense declined to comment on the decision, while the plaintiffs’ legal team did not immediately respond to requests for comment. This marks a key moment in the legal battle surrounding the NFT industry, as courts continue to address the complex relationship between digital assets, celebrity endorsements, and securities law. The outcome of this case could influence future lawsuits and regulations in the rapidly evolving NFT space.