Celebrity Promoters Sued Over Bored Ape NFT Endorsements

Celebrity Promoters Sued Over Bored Ape NFT Endorsements

Jimmy Fallon, Gwyneth Paltrow and Justin Bieber have been sued in a proposed class action lawsuit accusing them and a host of other celebrities of promoting non-fungible fraud tokens at the Bored Ape Yacht Club.

Lawsuit claims celebrities misled followers by buying BAYC NFTs, among other unregistered securities issued by Yuga Labs, to increase their value, forcing buyers to buy “losing investments at dramatically inflated prices” .

“The truth is that the company’s entire business model relies on the use of insidious high-profile celebrity marketing and promotional activities that are highly compensated (without disclosing them), to increase demand for Yuga titles by convincing potential investors that the price of these digital assets would appreciate,” reads the lawsuit filed Thursday in California federal court.

The suit also names Madonna, Kevin Hart, Stephen Curry, Snoop Dogg, Serena Williams, Post Malone, The Weeknd, Fallons’ production company, Electric Hot Dog, Inc., and Universal Television, among others. He claims most of them were recruited by talent manager Guy Oseary, who spearheaded a scheme with Yuga Labs to quietly pay them for their endorsements through crypto firm Moonpay. Oseary’s venture capital firm Sound Ventures was an early investor in Moonpay, according to the complaint.

Oseary is reportedly linked to several of the celebrity promoters, including Bieber, Paltrow and Hart, through their early investments in Moonpay. By increasing demand for NFT BAYC and Apecoin crypto tokens from Yuga Labs, the suit alleges that they have also increased demand for Moonpay.

“Oseary, the MoonPay Defendants, and the Promoter Defendants each shared the strong motive of using their influence to artificially create demand for Yuga securities, which in turn would increase the use of MoonPay’s crypto payment service to manage this new request,” the complaint reads. . “At the same time, Oseary could also use MoonPay to hide how he paid his celebrity cohorts for their direct or off-label promotions of Yuga financial products.”

In an episode of The show tonight on November 11, 2021, Fallon promoted Moonpay and the BAYC NFT collection by announcing that he got his first NFT through the crypto company, which bills itself as a white-glove service designed to help celebrities buy digital assets. He did not disclose that he had a financial stake in Moonpay.

“Electric Hot Dog or Universal have also not disclosed that this allegedly organic Tonight Show segment was actually a paid advertisement for the BAYC collection of NFT and MoonPay by two celebrities (Fallon and Winkelmann) who are business partners with a investor (Oseary) in Yuga and MoonPay,” attorney John Jasnoch writes in the complaint.

The suit, which names Oseary and Yuga Labs, says the promotion convinced investors to buy BAYC NFTs.

Each of the Promoter Defendants received digital assets from Moonpay or Yuga Labs for their endorsements, according to the suit. Bieber, for example, received BAYC NFT worth around $1.3 million when it was issued for an allegedly fraudulent Instagram post that said he bought it with his own money. Paltrow also announced to investors on January 26 that it was “joining” the BAYC community and thanking Moonpay for its services in facilitating the purchase. She also did not disclose that she had any financial stake in the company.

BAYC NFT trading volume has fallen 93% from its inception level. Similarly, the value of ApeCoin tokens has fallen 90% from its all-time high.

“In our view, these claims are opportunistic and parasitic,” a Yuga Labs spokesperson said in a statement. “We strongly believe they are without merit, and we look forward to proving it.”

Fallon, Bieber, Paltrow, Universal and Moonpay did not respond to requests for comment.

Famous crypto promoters including Kim Kardashian, Larry David and Tom Brady have been named in similar lawsuits alleging fraud over their endorsements. On Wednesday, a federal judge dismissed a lawsuit against EthereumMax crypto endorsers accusing them of fraudulently misleading their subscribers into buying EMAX tokens only to sell their stakes once its value was inflated. Although he said the case raised “legitimate concerns” about the ability of celebrities to persuade indiscriminate followers to buy “snake oil with unprecedented ease and reach,” the judge of US District Michael Fitzgerald concluded that “investors are expected to act reasonably before basing their bets on the prevailing zeitgeist.

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