Celebrity Endorsers sued for Boring Ape NFT endorsements
The suit accuses the creators of Bored Ape Yacht Club NFTs of enlisting A-listers to mislead their followers into buying bad investments at inflated prices.
Jimmy Fallon, Gwyneth Paltrow, and Justin Bieber have been sued in a proposed class action alleging fraud against them and a slew of other celebrities who pushed non-fungible tokens from the Bored Ape Yacht Club.
The suit claims the celebrities misled their followers into buying BAYC NFTs, among other unregistered securities issued by Yuga Labs, to pump up their value, causing buyers to purchase “losing investments at drastically inflated prices.”
“The truth is that the Company’s entire business model relies on using insidious marketing and promotional activities from A-list celebrities that are highly compensated (without disclosing such), to increase demand for the Yuga securities by convincing potential retail investors that the price of these digital assets would appreciate,” reads the complaint filed on Thursday in California federal court.
Madonna, Kevin Hart, Stephen Curry, Snoop Dogg, Serena Williams, Post Malone, The Weeknd, Fallons’ production business Electric Hot Dog, Inc., and Universal Television are among those named in the claim. It alleges that the majority of them were recruited by talent manager Guy Oseary, who spearheaded a scheme with Yuga Labs to pay them covertly for their endorsements using cryptocurrency startup Moonpay. According to the complaint, Oseary’s venture capital firm Sound Ventures was an early investment in Moonpay.
Through their early investments in Moonpay, Oseary is purportedly tied to various celebrity promoters, including Bieber, Paltrow, and Hart. The action claims that by increasing demand for BAYC NFTs and Yuga Labs’ Apecoin crypto tokens, they also enhanced demand for Moonpay.
“Oseary, the MoonPay Defendants, and the Promotor Defendants each shared the strong motive to use their influence to artificially create demand for the Yuga securities, which in turn would increase the use of MoonPay’s crypto payment service to handle this new demand,” the complaint reads. “At the same time, Oseary could also use MoonPay to obscure how he paid off his celebrity cohorts for their direct or off-label promotions of the Yuga Financial Products.”
In an episode of The Tonight Show on Nov. 11, 2021, Fallon promoted Moonpay and the BAYC NFT collection by announcing that he got his first NFT through the crypto firm, which bills itself as a white-glove service designed to help celebrities buy digital assets. He didn’t disclose that he had a financial stake in Moonpay.
“Nor did Electric Hot Dog or Universal disclose that this purportedly organic segment on the Tonight Show was, in reality, a paid advertisement for the BAYC collection of NFTs and MoonPay by two celebrities (Fallon and Winkelmann) who are business partners with an investor (Oseary) in both Yuga and MoonPay,” writes lawyer John Jasnoch in the complaint.
The suit, which names Oseary and Yuga Labs, says the promotion convinced investors to buy BAYC NFTs.
According to the lawsuit, each of the promoter defendants got digital assets from Moonpay or Yuga Labs in exchange for their endorsements. For example, Bieber earned a BAYC NFT valued at approximately $1.3 million when it was issued for an allegedly fake Instagram post claiming that he purchased it with his own money. Paltrow stated to investors on Jan. 26 that she has “joined” the BAYC community and praised Moonpay for its assistance in making the acquisition possible. She also failed to mention that she owns stock in the company.
BAYC NFT trading volume has fallen by 93% since its peak at the introduction. Similarly, the value of ApeCoin tokens has fallen by 90% from its all-time high.
“In our view, these claims are opportunistic and parasitic,” said a Yuga Labs spokesperson in a statement. “We strongly believe that they are without merit, and look forward to proving as much.”
Fallon, Bieber, Paltrow, Universal, and Moonpay didn’t respond to requests for comment.