NFTs or non-fungible tokens were all the rage and grew in popularity especially back in 2021. Among the famous ones were from Bored Ape's, and they were not exactly cheap. Since buyers acquired the NFTs, the prices have plummeted, and they are suing the auction house for what they call a "bad investment."
Bored Ape's Fall from Grace
Sotheby's Auction House is at the end of a class-action lawsuit filed by buyers of the popular NFT after its value significantly dropped from its price at purchase. The buyers believe that they were duped into purchasing as the NFT was given an "air of legitimacy" to generate investors.
The Bored Ape NFTs gained so much popularity that images of its products have circulated around social media for quite some time. Now, the buyers claim that the prices during the auction were "rooted in deception," as mentioned in Ars Technica.
According to the lawsuit filed in the US District Court for the Central District of California, Sotheby's failed to disclose that the buyer was FTX, which has been the subject of disgrace in the cryptocurrency industry because of its former CEO, Sam Bankman-Fried.
The auction house represented the buyer as a "traditional collector" which misled buyers and investors into thinking that the market for BAYC NFTs had crossed over to a mainstream audience. Investors were led to think that there would be profit in owning the tokens.
Back in 2021, the "Ape In!" auction sold a collection of 101 Bored Ape NFTs for a total of $24 million, which is twice the pre-auction estimate of $12 million. Reports say that the average price was at $241,000, which is now valued at only $50,000 of ether cryptocurrency.
The creator of the NFT, Yuga Labs claimed that the tokens were not only digital collectibles, but also served as a "Yacht Club membership card." This gave owners access to a members-only club whose benefits and offerings will increase over time.
Not the First Class-Action Suit Against Bored Ape
This isn't the first time that Sotheby's was hit with a lawsuit regarding the Bored Ape NFTs. The previous lawsuit against promoters like Kevin Hart, Snoop Dogg, Serena Willians, Jimmy Fallon, Paris Hilton, Justin Bieber, and many others has been amended to include the auction house.
Mainly, the class-action suit filed by Scott+Scott Attorneys at Law LLP was against Yuga Labs. Specific charges include violations of unfair competition laws, aiding and abetting, civil conspiracy, and more, as reported by The Verge.
The lawsuit accused Bored Ape NFT creator Yuga Labs colluded with Sotheby's to run a deceptive auction, adding that Sotheby's failed to mention that FTX had several deep toes to Yuga such that it would be mutually beneficial for Yuga and FTX if the BAYC NFT collection rose in price.
Yuga Labs and the other defendants will have until September 12th to file motions that would dismiss the lawsuit. Sotheby's defended its name, saying that the allegations were baseless and that it was prepared to defend itself.
