In total, 40 individuals and companies have together filed the petition against Yuga Labs’ Moonpay over the illegal promotion of their NFTS.
Some of the famous personalities who are among the defendants in the lawsuit are Paris Hilton, Jimmy Fallon, Snoop Dog Madonna, , and Justin Bieber.
Yuga Labs, the developers of the (BAYC) and Moonpay, are fighting a class-action action over purportedly leveraging celebrities to promote and sell nonfungible tokens in a deceptive manner (NFTs).
The lawsuit was filed on 8th December in the Central District of California by the legal attorney of Scott+Scott Attorneys named John T. Jasnoch.
The applicant has argued that the crypto-based platform has tried to use the fame of Hollywood celebrities to promote its upcoming class of NFTS.
These current promotions have not fulfilled the legal closure that us being required to use someone else or will for business purposes.
Jasnoch also said: “This case exemplifies these worries since it includes a massive scheme involving a cryptocurrency startup firm, Yuga Labs, Inc., a Hollywood talent agency, and a front operation (MoonPay), all operating together just to advertise and sell a class of digital assets.”
Executives Made Clear That
The executive accused Yuga Labs and the Hollywood talent agency together made a plan to use the fame of a-class Hollywood singers in order to create hype about the upcoming NFT collection in order to gain the interest of investors across the globe.
For the membership BAYC, the approval and support of very powerful celebrities were necessary. However, the Hollywood talent agency Oseary did not ask for consent if such celebrities.
That’s the reason that this case has caught the eye of the regulators and now it seems that Yuga Labs are in trouble.
Two of the petitioners, in this case, are Adonis Real and Adam Titcher, both have purchased the NFTS powered by Yuga Labs from April 2021 till now. The class action has referred to the previous statement made by the U.S. security and exchange commission on a similar matter.
The U.S. Security and Exchange Commission previously concluded that:
“Such endorsements are totally unlawful and illegal if the earnings received by the endorsement are not disbursed to the accounts of those whose name, or fame is being used to earn the profits.”
Hence it is quite possible that Yuga Labs suffer from heavy penalties. However, the final outcome only depends on the decision made by the California Court.
The recent crypto winter continues to harm cryptocurrency protocols across the globe. The recent crypto crisis came to life with the insolvency of the FTX crypto exchange.
However, in response to this allegation, the officials of Yuga Labs have told Cointelegraph these allegations are based less and indicate the malign attention towards the NFT project.
The officials have also labeled those who are raising such allegations as opportunistic. Moreover, the officials of Yuga Labs also said those raising these allegations have no proof whatsoever. So, it will quite be easy for us to defend ourselves.
Yuga Labs is most likely to win the lawsuit according to the company’s officials. Moreover, it has also been added by the spokesperson of Yuga Labs that they will also ask for compensation due to the reputational woes company has suffered following these allegations.
However, if we look at the history of Yuga Labs this is not the first that blockchain protocol is facing regulatory allegations. Previously the company also faced regulatory action from U.S. regulators.
But the fact of the matter is that the case is not in the court and the court is working with the U.S SEC to find who the guilty party is. If the allegations are true, then Yuga Labs can face serious regulatory and financial troubles in the times to come.