In a class action lawsuit filed Monday by the law firm Scott+Scott, a number of celebrities, including Justin Bieber, Madonna, Stephen Curry, Paris Hilton, Jimmy Fallon, Serena Williams, Kevin Hart and Gwyneth Paltrow,are being sued for fraud for their promotion of non-fungible tokens (NFTs) from the Bored Ape Yacht Club collection.
NFTs are representations of physical and digital assets on the blockchain network, which emerged in Ethereum and use the same technology as cryptocurrencies. They were popularized as digital art, but instead of being exhibited in museums, they are viewed on the Internet.
Other celebrities and companies included in this extensive group of defendants include: Wylie Aronow, Greg Solano, Kerem Atalay, Nicole Muniz, Snoop Dogg, Reddit CEO Alexis Ohanian, Jimmy Fallon's production company Election Hot Dog, Adidas, Post Malone and Universal Television, among others.
Buying assets at "drastically inflated" prices
According to the report published by The Hollywood Reporter magazine, the celebrities pushed their followers to buy these assets "at drastically inflated prices," promising that their value would appreciate even more. In turn, Yuga Labs, the company that minted the Bored Ape Yacht Club NFTs, saw its value increase.
However, what happened with the touted assets was the complete opposite. According to the New York Post, some of those investments are now worth as little as 10% of their original value. As a result, investors suffered significant financial losses.
"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 of the Yuga securities," states the lawsuit filed in the United States District Court for the Central District of California on behalf of Adam Titcher and Adonis Real.
