{"id":21273,"date":"2023-08-17T23:29:18","date_gmt":"2023-08-17T23:29:18","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/nft\/sothebys-joins-growing-list-of-defendants-in-bayc-class-action-lawsuit\/"},"modified":"2023-08-17T23:29:38","modified_gmt":"2023-08-17T23:29:38","slug":"sothebys-joins-growing-list-of-defendants-in-bayc-class-action-lawsuit","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/nft\/sothebys-joins-growing-list-of-defendants-in-bayc-class-action-lawsuit\/","title":{"rendered":"Sotheby\u2019s Joins Growing List of Defendants in BAYC Class-Action Lawsuit"},"content":{"rendered":"
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Sotheby\u2019s auction house was recently named as a defendant in an ongoing class-action lawsuit that was filed by Bored Ape Yacht Club (BAYC) investors against its parent company, Yuga Labs.<\/p>\n

Sitting in the Hot Seat<\/h2>\n

The class-action lawsuit, filed in December 2022, named more than 40 defendants with allegations that they were artificially inflating the prices of BAYC NFTs through celebrity promotions without the proper disclaimers required by the anti-touting provision of the Securities Act.\u00a0<\/p>\n

Celebrities named in the lawsuit included Justin Bieber, Paris Hilton, Jimmy Fallon, Gwyneth Paltrow, Serena Williams, Madonna, Steph Curry, and more who have all publicly vouched for BAYC in the past.\u00a0<\/p>\n

One of the biggest catalysts of the heated scrutiny against celebrity endorsements of crypto and NFT projects began with Kim Kardashian, who in 2021, illegally promoted a cryptocurrency called EthereumMax (EMAX). She ended up settling with the SEC a year later by paying $1.26 million USD in penalties, disgorgement, and interest due to her failure to disclose that she was paid $250,000 USD to promote EMAX.\u00a0<\/p>\n

Other celebrities who have also been under fire for having promoted other crypto projects, including the now fallen FTX exchange, included Ne-Yo, Lindsay Lohan, Justin Sun, Soulja Boy, Floyd Mayweather, Jr., DJ Khaled, and more.\u00a0<\/p>\n

Why Sotheby\u2019s?<\/h2>\n

The Amended Complaint, filed on August 4, alleges that Sotheby\u2019s, in collaboration with Yuga, engaged in a scheme back in September 2021 to \u201crun a deceptive auction\u201d of 101 BAYC NFTs, called \u201cApe In!\u201d<\/p>\n

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#AuctionUpdate<\/a> 101 Bored Ape Yacht Club NFTs just sold for $24.4 million and 101 Bored Ape Kennel Club NFTs achieved $1.8 million in our Ape in! auction \u2013 the most significant #BAYC<\/a> sale to date. Congrats to all the apes out there \ud83d\udc35\ud83d\udc36 pic.twitter.com\/e7UghlgtKy<\/a><\/p>\n

\u2014 Sotheby’s (@Sothebys) September 9, 2021<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

Sotheby\u2019s told CNN that the allegations against it are \u201cbaseless,\u201d and it is prepared to \u201cvigorously defend\u201d itself, as well as Yuga sharing the same sentiment.\u00a0<\/p>\n

The Amended Complaint also referenced Max Moore, the auction house\u2019s Head of Contemporary Art Auctions, for having posted an advertisement for the BAYC auction from his Twitter account, while also publicly touting it during an official Sotheby\u2019s x BAYC Sale Twitter Spaces, hosted by Rug Radio founder Farokh Sarmad.\u00a0<\/p>\n

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It continued by alleging that Sotheby\u2019s had claimed to have sold the entire lot of NFTs to an anonymous buyer for $24.4 million, with each BAYC NFT having a floor price of $240,000 \u2013 a $100,000 increase than the original price of the BAYC\u2019s at the time.\u00a0<\/p>\n

MoonPay\u2019s \u201cConfidential Witness #1\u201d<\/h2>\n

The Amended Complaint also indicates a \u201cConfidential Witness\u201d who claims to have worked in MoonPay\u2019s compliance department, alleging that there were suspicions surrounding MoonPay\u2019s activities with respect to facilitating celebrity endorsements of the BAYC NFTs.\u00a0<\/p>\n

It goes on to allege that a number of MoonPay compliance employees were granted \u201cheightened access to files and data associated with MoonPay customer financial transactions\u201d and that there was no files or information as to these celebrity clients \u2013 even after conducting \u201cEnhanced Due Diligence, Know Your Customer, and Anti-money Laundering checks\u201d on MoonPay customers.\u00a0<\/p>\n

In June, The Block<\/em> <\/em>reported that the $3.4 billion crypto startup helped inflate BAYC prices by gifting BAYC NFTs in exchange for the celebrities promoting them on their own accounts, as well as gifting NFTs to some celebrities without the expectation of payment.\u00a0<\/p>\n

Regardless, the current NFT landscape is certainly murky, causing justified concerns as to the potential legal ramifications behind each and every decision to publicly market a project and how to go about it.\u00a0<\/p>\n

The answers we are seeking ultimately lie with the SEC and our courts.<\/p>\n<\/p><\/div>\n