Thread 🧵: Yuga Labs Lawsuit
Yuga Labs seems to be under threat of a class action lawsuit
@yugalabs seems to be under threat of a class action lawsuit
Why are they being sued?
Will Yuga Labs be facing legal action?
We dove in and here's everything you need to know about the Yuga Labs lawsuit: 👇🧵
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Yuga Labs is the creator of the popular NFT collection - Bored Ape Yacht Club (@BoredApeYC)
Yuga Labs also launched its own governance token - Ape Coin ($APE)
Yuga Labs's most recent funding round values the company at $4 billion
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But, the #BAYC Floor Price currently stands at 85.0 $ETH, down ~50% from its all-time high of 153 $ETH
ApeCoin ($APE) was also launched in March 2022 as a governance token for the ecosystem
$APE reached an ATH of $23 at the end of April
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The price is currently hovering around $7
As a result, both #BAYC NFTs and $APE token have caused retail investors to lose millions of dollars
But Yuga Labs aren't responsible for the losses, right?
What then went wrong with Yuga Labs?
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The class action lawsuit against Yuga Labs is now being organized by the law firm Scott+Scott
According to the lawsuit, Yuga Labs inappropriately advertised #BAYC and $APE as securities with "guaranteed returns" and further deceived investors into buying them
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Yuga Labs are being criticized for using endorsements and celebrities like @SnoopDogg and @Eminem to "artificially" inflate the price of the #BAYC NFTs and $APE while promising Yuga investors huge returns on their investments
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In reality, retail investors were left with #BAYC NFTs that are down 50% from ATH and $APE tokens that had lost over 87%
This indicates that the #BAYC's growth relied solely on continuous promotion as opposed to actual utility or underlying technology
Sounds like a Ponzi?
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As of now, it is unknown whether NFTs qualify as "SECURITIES"
If the court decides BAYC NFTs to be considered as securities, then Yuga Labs will probably be sued for failing to provide the necessary information and obligations about the "securities", as most businesses do
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The SEC has thus far refrained from entering the Art market for regulations
Regulating the NFT market places an incredible burden on the SEC to also regulate the entire art market
So, this suit will decide whether the SEC views NFT and tokens like $APE as securities or not
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Meanwhile, Scott+Scott are encouraging Yuga Labs individual investors to join together to seek compensation for losses suffered from the purchase of #BAYC NFTs and $APE tokens
However, there aren't any official complaints filed in the court records as of yet
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Will the SEC declare NFTs as a security or will they wait?
We will be closely monitoring this lawsuit as it develops in the court
So, follow us to stay updated on this lawsuit! The link to the official report: https://scott-scott.com/cryptocurrency-cases/yuga-labs/
We also wrote another deep dive thread on the current Coinbase and SEC debacle Make sure to check it out! The regulatory landscape is developing before our eyes
