Sotheby’s has been added as a defendant in a group of investors’ ongoing lawsuit over the house’s promotion of NFTs sold by the Web3 company Yuga Labs, which is best known as the parent company of the viral collection Bored Ape Yacht Club (BAYC).
Initially, the class action lawsuit focused solely on Yuga Labs. The suit centers around allegations that it misled investors in the marketing of the BAYC digital assets.
The revised lawsuit alleges that the first “scheme” was a “deceptive Sotheby’s auction” with the aim of creating an “air of legitimacy”. The implication is that Sotheby’s found this obscure NFT collection and promoted the hell out of it, which is not entirely true. In reality it works the other way around.
In order for Sotheby’s to get behind an NFT collection, or an art collection for that matter, it needs to have an existing high profile. And BAYC NFTs already had a floor price of around $75,000 before Sotheby’s got involved, which is publicly available information. There’s no question that the price continued to rocket afterwards, but so did the NFT market as a whole.
A series of 10,000 collectable, digital monkey artworks, Bored Ape Yacht Club by Yuga Labs was for a long time considered to be among the most valuable NFT collections in the world.
The lawsuit is a sign of times, marking the sentiment of angry investors with nowhere else to turn as NFT values have plummeted over the last few years.
The lawsuit, which was initially filed in December, also names Yuga Labs and A-listers including Madonna, Paris Hilton, Justin Bieber, Jimmy Fallon, and Mike “Beeple” Winkelmann as defendants accused of defrauding investors. The suit alleges Yuga Labs made paid celebrity endorsements appear organic, which artificially boosted NFT prices.
The plaintiffs are seeking compensation of more than $5 million before costs and interest.
The case is no. 2:22-cv-08909-FMO-PLA.