Jimmy Fallon, Paris Hilton, and other well-known celebrities who have promoted NFTs leveraging their celebrity status are currently the focus of a planned class action lawsuit charging them with fraud. Along with the designer of the well-known NFT collection – Bored Ape Yacht Club, the celebrities are reportedly among an extensive list of well-known figures being sued by investors. Let’s look at more details in this article.
Why Are Celebrities Being Sued?
On December 8, Yuga Labs, widely famous for its Bored Ape Yacht Club (BAYC) NFT collection, was accused of violating rules by promoting celebrity endorsement of its virtual goods.
The lawsuit also charges a large list of high-profile defendants, including Madonna and Paris Hilton, of taking payment for an unreported promotion by using the cryptocurrency trading application MoonPay in between.
The plaintiffs contend that Yuga Labs executives teamed up with MoonPay and Hollywood talent agent Guy Oseary, to obtain unauthorized celebrity endorsements that artificially boosted the worth of BAYC NFTs and encouraged investors to embark on a vessel that was sinking.
According to the lawsuit, “The Company advertises the Bored Ape ecosystem as a trademark that is naturally adored by some of the most recognized celebrities in the globe. But the reality is that the Company’s entire model of operation depends on using deceptive promotional and marketing campaigns from A-list entertainers who are well-paid to increase demand for the Yuga equities by persuading possible retail investors that the cost of these digital products would increase. Furthermore, these investors are told that as participants of the club, they would be offered unique access to further investment products and benefits.”
The endorsements raised interest in and demand for Bored Ape NFTs, leading investors to acquire these losing assets at substantially high prices. The Scott & Scott team that filed the case claims to have accumulated a lot of proof. For example, in November 2021, MoonPay shared a portion of Post Malone’s music video for the song One Right Now, in which the singer can be seen using the MoonPay app to purchase a BAYC NFT. Even though the artist had gotten a transfer of Ether worth the equivalent of $1.4 million a month earlier, the post’s caption implied coincidence when it said, “this just happened.”
According to the lawsuit, Justin Bieber obtained a BAYC NFT valued at $1.3 million in return for an Instagram post saying that he paid for it himself.
The lawsuit also cites a scene from The Tonight Show from November 2021 in which Fallon revealed he had used MoonPay to buy his first NFT while speaking with NFT creator Mike Winkelmann. According to the lawsuit, Fallon and Winkelmann were hired and compensated to advertise Bored Apes and MoonPay on the show.
The lawsuit asserts that Fallon failed to disclose his financial connections to MoonPay or that he had a financial stake, either directly or indirectly, in Yuga securities’ rising sales and popularity. The attorneys claimed that neither EHD nor Universal disclosed that this allegedly natural Tonight Show piece was, in fact, a paid commercial by two stars who are business associates with an owner in both Yuga and MoonPay for the BAYC line of NFTs.
Final Thoughts
This case was filed shortly after the NFT and cryptocurrency markets experienced a bear market sparked by the FTX insolvency, a multi-billion dollar revenue slump, and a steady decline in the number of exclusive NFT wallets. As a result, although BAYC NFTs remain among the most lucrative and recognizable crypto assets, trade volume has decreased by approximately 50% since its January 2022 peak.
