Archived version: https://archive.ph/9WPwx

The Sotheby’s auction house has been named as a defendant in a lawsuit filed by investors who regret buying Bored Ape Yacht Club NFTs that sold for highly inflated prices during the NFT craze in 2021. A Sotheby’s auction duped investors by giving the Bored Ape NFTs “an air of legitimacy… to generate investors’ interest and hype around the Bored Ape brand,” the class-action lawsuit claims.

The boost to Bored Ape NFT prices provided by the auction “was rooted in deception,” said the lawsuit filed in US District Court for the Central District of California. It wasn’t revealed at the time of the auction that the buyer was the now-disgraced FTX, the lawsuit said.

“Sotheby’s representations that the undisclosed buyer was a ‘traditional’ collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience,” the lawsuit claimed. Lawsuit plaintiffs say that harmed investors bought the NFTs “with a reasonable expectation of profit from owning them.”

Sotheby’s sold a lot of 101 Bored Ape NFTs for $24.4 million at its “Ape In!” auction in September 2021, well above the pre-auction estimates of $12 million to $18 million. That’s an average price of over $241,000, but Bored Ape NFTs now sell for a floor price of about $50,000 worth of ether cryptocrurrency, according to CoinGecko data accessed today.

Investors previously sued Bored Ape creator Yuga Labs, four company executives, and various celebrity promoters including Paris Hilton, Gwyneth Paltrow, Kevin Hart, Snoop Dogg, Serena Williams, Madonna, Jimmy Fallon, Steph Curry, and Justin Bieber. The original class-action was filed in December 2022, and Sotheby’s was added as a defendant in an amended complaint submitted on August 4.

Yuga describes its collection of 10,000 Bored Ape NFTs as “unique digital collectibles living on the Ethereum blockchain” that double as a “Yacht Club membership card.” The website has some “members-only” areas. “When you buy a Bored Ape, you’re not simply buying an avatar or a provably rare piece of art,” the NFT collection’s website says. “You are gaining membership access to a club whose benefits and offerings will increase over time. Your Bored Ape can serve as your digital identity, and open digital doors for you.”

Lawsuit: Yuga “colluded” with Sotheby’s

The amended lawsuit alleges that “Yuga colluded with fine arts broker, Defendant Sotheby’s, to run a deceptive auction.” After the sale, a Sotheby’s representative described the winning bidder during a Twitter Spaces event as a “traditional” collector, the lawsuit said.

The lawsuit said it turned out the auction buyer was now-bankrupt crypto exchange FTX, whose founder Sam Bankman-Fried is in jail awaiting trial on criminal charges. Ethereum blockchain transaction data shows that after the auction, “Sotheby’s transferred the lot of BAYC NFTs to wallet address 0xf8e0C93Fd48B4C34A4194d3AF436b13032E641F3,77 which, upon information and belief, is owned/controlled by FTX,” the complaint said. Speculation that FTX was the buyer had been percolating since at least January 2023.

The lawsuit alleges that Yuga Labs and Sotheby’s violated the California Unfair Competition Law, the California Corporate Securities Law, the US Securities Exchange Act, and the California Corporations Code. The plaintiffs also claim that Sotheby’s Metaverse, an NFT trading platform opened after the auction, “operated (or attempted to operate) as an unregistered broker of securities.”

“FTX has several deep ties to Yuga such that it would be mutually beneficial for both Yuga and FTX (as well as Sotheby’s) if the BAYC NFT collection were to rise in price and trading volume activity. Upon information and belief, given the extensive financial interests shared by Yuga, Sotheby’s and FTX, each knew that FTX was the real buyer of the lot of BAYC NFTs at the Sotheby’s auction at the time that Sotheby’s representatives were publicly representing that a ‘traditional’ buyer had made the purchase,” the lawsuit said. FTX is not named as a defendant.

Ape prices soared, then plummeted

After the auction, the price of Bored Ape digital assets hit a new high and kept rising for months. It peaked at over $420,000 in April 2022 but plummeted to about $90,000 six weeks later, according to CoinGecko.

The class action lawsuit’s named plaintiffs are Johnny Johnson, Ezra Boekweg, Mario Palombini, and Adam Titcher. They are trying to get certification of a class consisting of “all investors who purchased Yuga’s non-fungible tokens (‘NFTs’) or ApeCoin tokens (‘ApeCoin’) between April 23, 2021 and the present.” There were over 103,000 account holders of Yuga securities as of December 1, 2022, the lawsuit said.

“While the Executive Defendants made hundreds of millions of dollars, investors were left with NFTs worth a fraction of their artificially inflated value,” the original version of the complaint in December said.

Yuga and other defendants have a September 12 deadline to file motions to dismiss the complaint. Sotheby’s told CNN this week that the “allegations in this suit are baseless, and Sotheby’s is prepared to vigorously defend itself.” Yuga Labs similarly called the allegations “completely without merit or factual basis.”

    • drcobaltjedi@programming.dev
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      1 year ago

      The C&H people don’t fucking pull punches and I love it. A few weeks ago when elmo rebranded twitter he asked people for a new logo and a C&H artist replied with the confederate flag

    • Dubious_Fart@lemmy.ml
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      1 year ago

      So, dumb question, but that picture is tiny and I cant read it.

      and its not clickable so i can view a bigger version.

      and if I zoom the browser in, the image stays the same size.

      how is everyone else reading this damn thing?

    • nothacking@discuss.tchncs.de
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      1 year ago

      If you bought one the best thing to do (financially) is to immediately sell it off to another sucker, perpetuating the cycle of scams. (Make sure to hype it on Reddit or Twitter so you can sell it for even more)

  • carly™@lemm.ee
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    1 year ago

    Who would’ve thought that an incredibly dubious claim to “ownership” of a JPEG image would fall in value so dramatically?

  • 👁️👄👁️@lemm.ee
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    1 year ago

    If only someone told them… Except you know, literally every person on every social media ever. How did these people just like not look at the social media around these at all??

    • soyagi@yiffit.netOP
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      1 year ago

      They did see the criticism; in fact a lot of it was aimed directly at them. But they thought that they were right.

      • 👁️👄👁️@lemm.ee
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        1 year ago

        They’re going to have a tough time in court proving they were mislead with overwhelming evidence warning that they’re dumb as shit

        • nothacking@discuss.tchncs.de
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          1 year ago

          IANAL, but I think that they would only have to prove that people were lying with the intent to commit fraud, not that they were not stupid for falling for it.

          I have found literal thousands of posts made to Reddit and Twitter claims that these are good investments and some outright lying about NFTs and shitcoin s, and I don’t have millions of dollars at stake.

    • borlax@lemmy.borlax.com
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      1 year ago

      Because when idiots see criticism they take it as haters just hating and it strengthens their convictions.

    • codepengu1n@feddit.it
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      1 year ago

      You don’t even need to be told. NFTs were very obviously stupid. I guess it’s true that the fool and his money is easily parted.

      • Duamerthrax@lemmy.ml
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        1 year ago

        Even they knew it was bs. Their supposed confidence in nfts was just them trying to drive the market up so they could unload it on the next sap. They didn’t consider that they were the sap all along. The collapse was faster then crypto because nfts don’t even have a real utility. And yes, crypto does have a utility as currency in nitche communities, but most people treated it like commodity.

  • MustrumR@kbin.social
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    1 year ago

    Seriously, fuck rich and stupid people.

    "Oh no - we invested our money in racist monkey JPEGs ignoring any risk and lost some of it.

    Now instead of accepting the loss like most individual investors, we sue to game the system in our favor in yet another way."

    • nothacking@discuss.tchncs.de
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      1 year ago

      I think most people that lose money in NFT and shitcoin scams are not the ultra rich, but normal people looking to grow their savings to avoid having to work multiple jobs just to break even. I know people that have lost years of savings and some even got evicted because of this crap. Most ultra rich know these are scams, after all, they have to get rich somehow.

  • Thorny_Thicket@sopuli.xyz
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    1 year ago

    I might switch from index funds to stock picking if I’m too able to get my money back for every bad investment I make

  • nighty@lemmy.ml
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    1 year ago

    Now they can join the select club of people who are suing NFT makers after being conned into buying them.

    • Thorry84@feddit.nl
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      1 year ago

      You are joking, but every grocery shop I go to would gladly reimburse you if you bought some ham you didn’t like. They would even ask you what was wrong with it, if there might be a health concern they will do a full recall. If they get too many complaints, they will pull the product. The price of a single ham is easily worth the feedback on the product and the continued loyalty of the customer.

      • sugar_in_your_tea@sh.itjust.works
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        1 year ago

        Yup. This is especially true for Costco, where you don’t even need a good reason to return something. Some grocery stores may refuse a refund, but Costco will pretty much always honor it.

    • Heikki@lemm.ee
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      1 year ago

      I used to work at walmart, in college. I recall once we had someone return a more than half eaten rotisserie chicken. They said it tasted funny… after eating half… probably in their car. It was still luke warm.

  • Raisin8659@monyet.cc
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    1 year ago

    It’s cool. It’s hip. It’s Blockchain! Come on, folks, let’s invest in boring and colorful monkeys. You WILL be rich beyond imagination!

    • fidodo@lemm.ee
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      1 year ago

      They weren’t even uniquely drawn, they just mr potato head combined a handful of components

  • Scrof@sopuli.xyz
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    1 year ago

    Can’t say they didn’t get what they deserved but of course any NFT scammer deserves some jail time too.

    • sugar_in_your_tea@sh.itjust.works
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      1 year ago

      Yeah, I might pay a couple bucks for one as a conversation piece, but that’s about it. And I’m not sure if I’d actually pull the trigger.

      • Corkyskog@sh.itjust.works
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        1 year ago

        Where are you going to display it, and why? Like why is it even worth a dollar to you? There are a lot of cooler NFT art pieces that sell for literally pennies… and I still don’t really get it.

        • sugar_in_your_tea@sh.itjust.works
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          1 year ago

          I wouldn’t. If I wanted to display it, I would just grab the JPEG or whatever.

          The point is that it’s a conversation piece. If someone talks about crypto, maybe I’d bring up that I own an NFT that people have heard of. Then I guess check the price, have a laugh, mention how stupid it is, then move on to the next topic.

          That’s it. A couple bucks for an occasional laugh with friends sounds worth it. It’s just a weird part of the zeitgeist and is fun to talk about.

          But I’m not willing to pay more than a couple bucks for a novelty like that, I would probably just generate my own at that point.

          • Corkyskog@sh.itjust.works
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            1 year ago

            If you want to try a cool cheep chain, I suggest the WAX chain. There are a lot of fun projects. If your just interested in a more art type NFT, CryptomonKeys are kind of cool looking and they have cool distribution mechanics. For example each time they release a new monkey they randomly pull a monkey that’s already been released, anyone owning the monkey gets a free NFT of the new release. Then there is a trading game. If you complete monkey sets, you get coins to buy old monkey cards for free. There is a whole website where people temporarily trade cards to complete sets. There is also a bunch of other free ways and competitions to get Monkeys other than just buying them.

            My cheapest Monkey is worth like 5 cents, and my most expensive is like $2. I probably spent $5 total and the collection is worth a minimum of $17. (It was worth a ton more before the entire crypto market collapsed).