Celebrities Jimmy Fallon, Gwyneth Paltrow, and Justin Bieber have been named in a proposed class action lawsuit accusing them of fraud for promoting the Bored Ape Yacht Club’s non-fungible tokens (NFT).
The suit alleges that celebrities misled their followers into buying BAYC NFTs and other unregistered securities issued by Yuga Labs to increase the value of these investments artificially, leaving buyers with significantly overpriced and, ultimately, losing assets.
The company’s alleged business model has been called out in a complaint filed on Thursday in California federal court. The complaint claims that the company uses A-list celebrities and highly compensated promotional activities to increase demand for Yuga securities without disclosing such arrangements to potential retail investors. This could lead them to believe that these digital assets would appreciate the price.
The lawsuit names various well-known celebrities such as Madonna, Kevin Hart, Stephen Curry, Snoop Dogg, Serena Williams, Post Malone, The Weeknd, Electric Hot Dog, Inc., Universal Television, and Guy Oseary. It is alleged that Guy Oseary, a talent manager working with Yuga Labs and the crypto firm Moonpay, paid the celebrities for their endorsements through discreet transactions. Furthermore, according to the complaint, Sound Ventures, a venture capital firm led by Oseary himself, was an early investor in Moonpay.
According to reports, Oseary is associated with Justin Bieber, Gwyneth Paltrow, and Kevin Hart due to their initial investments in Moonpay. It has also been alleged that they deliberately drove up the demand for BAYC NFTs and Yuga Labs’ Apecoin crypto tokens by funneling money into Moonpay.
The complaint states that Oseary, the MoonPay Defendants, and the Promotor Defendants all had strong incentives to use their influence to generate artificial demand for the Yuga securities, which would result in more usage of MoonPay’s crypto payment service. Additionally, Oseary could have also used MoonPay to conceal how he compensated his celebrity partners for their promotional activities related to Yuga Financial Products.
On November 11, 2021, Jimmy Fallon promoted Moonpay and the BAYC NFT collection on The Tonight Show. He shared that he recently acquired his first NFT through the crypto firm, which promises to provide celebrities with a white-glove service for buying digital assets. He didn’t disclose any financial ties between himself and Moonpay.
Lawyer John Jasnoch, in his complaint, revealed that the purported organic segment on The Tonight Show featuring Jimmy Fallon and Beeple’s creator, Mike Winkelmann, was, in fact, a paid advertisement for the BAYC NFT collection. He also noted that Fallon and Winkelmann are business partners with investor Guy Oseary in both Yuga Labs and MoonPay, who used this promotion to convince investors to purchase the BAYC NFTs.
The BAYC NFT received by Justin Bieber had an estimated value of $1.3 million at the time of issuance. However, since then, trading volume for BAYC NFTs has declined drastically, with a 93 percent decrease in value from its peak. Similarly, ApeCoin tokens have dropped 90 percent from their all-time high. Gwyneth Paltrow’s endorsements did not disclose her financial stake in Moonpay or Yuga Labs and could contribute to this decrease in digital asset values.
The spokesperson for Yuga Labs had strong words for the parties involved in the claims against them. “In our view, these claims are opportunistic and parasitic,” they said. “We strongly believe they are without merit and look forward to proving as much.”
However, Fallon, Bieber, Paltrow, Universal, and Moonpay declined to comment.
On Wednesday, a federal judge dismissed a lawsuit against celebrity promoters of crypto EthereumMax, including Kim Kardashian, Floyd Mayweather, and Paul Pierce. Despite raising legitimate concerns about celebrities persuading followers to invest in tokens, Judge Michael Fitzgerald stated that investors must act reasonably when considering investment opportunities. This ruling reflects increased scrutiny of crypto endorsements by prominent public figures.
Marine Corps Veteran-turned-national-tv-personality Eric Mitchell is a world leading expert in sports media, regularly appearing on the world’s largest outlets from BBC, MSNBC, Fox News, Bloomberg, CNN and more. His signature blend of snark and industry expertise landed him columns at none other than RollingStone, GritDaily, PopWrapped, Disrupt — and most recently — Editor in Chief at NFT Today Magazine. When he’s not making media appearances or running his empire at LifeFlip Media, he can be found entertaining his thousands of loyal followers on social media through his authentic filter-free content.