Photo Credit: BAYC NFT
A federal judge has opted not to dismiss the years-old lawsuit filed against Justin Bieber, Madonna, and a number of others over alleged Bored Ape Yacht Club NFT deceptions.
That determination emerged in a new order, obtained exclusively by DMN, on several pending dismissal motions. For a bit of quick background – the class action complaint was originally submitted in December of 2022 – it’s hardly a secret that the vast majority of non-fungible tokens have parted with a massive amount of value since their hype-fueled height.
(At the time of this height, Universal Music Group’s 10:22PM even debuted a “supergroup,” Kingship, consisting of Bored Ape Yacht Club characters. The virtual band, while seemingly light on actual music releases, rolled out a Roblox experience last year.)
And according to the plaintiffs here, said hype, driven by “manufactured celebrity endorsements and misleading promotions” involving the defendants, caused unwitting customers to pursue “losing investments at drastically inflated prices.”
Naming other defendants including but not limited to Yuga Labs, Guy Oseary, Adidas, Serena Williams, Khaled, Snoop Dogg, Post Malone, Steph Curry, and (as of last August) Sotheby’s, the suit also describes alleged connections between the Bored Ape NFTs and the since-imploded FTX.
Meanwhile, much of the action is dedicated to charting the precise timetable associated with the “meteoric rise” of Bored Ape NFTs and the subsequent floor-price deflation that allegedly left misguided buyers in a bad spot.
In terms of the actual claims, the filing parties are alleging multiple violations of various California business and consumer laws as well as separate violations of the Exchange Act and the Securities Act.
Late November of last year saw Yuga Labs fire off an over 60-page motion to dismiss the case, maintaining, among other things, that the NFTs don’t constitute securities and that there wasn’t any “materially false or misleading statement, omission or fraudulent scheme” in play during the relevant period.
Additionally, individual defendants such as Bieber likewise urged the court to dismiss, arguing in many more words that the artist’s Bored Ape promotional posts on social media are non-actionable.
“Bieber’s purported statements [about Bored Ape NFTs] are non-actionable generalized and/or humorous statements on which no reasonable consumer would rely,” reads one line from the 30-year-old’s reply supporting Yuga’s dismissal motion.
Of course, there’s nothing humorous about losing boatloads of money, and the dismissal arguments haven’t persuaded the court at this stage.
Though Judge Fernando M. Olguin acknowledged “concerns” about the claims regarding the defendants’ express knowledge of the allegedly unlawful conduct, he underscored the need to begin by deciding whether the NFTs in question constitute securities as defined by the Securities and Exchange Acts.
Running with the point, the court rejected without prejudice the dismissal motions and set a September 3rd deadline for the parties to submit a proposed order and schedule for handling these same motions – albeit with the focus confined to the NFTs’ securities-classification status.
Should it be found that the NFTs do, in fact, constitute securities, the defendants could then submit renewed dismissal motions or seek to have the originals reinstated, the court said.
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