More than 40 celebrities and companies are defendants in a lawsuit brought against Yuga Labs and Moonpay over their alleged use to misleadingly promote NFTs.
Yuga Labs and MoonPay, two companies at the centre of a legal dispute concerning the sale of Non-Fungible Tokens (NFTs) featuring the likenesses of various celebrities, have been thrust into the spotlight.
The lawsuit, filed by a group of investors in the U.S. District Court for the Northern District of California, alleges that Yuga Labs and MoonPay defrauded investors and violated U.S. securities laws by selling unregistered securities.
Alleged misleading sale of NFTs
The lawsuit follows a campaign by Yuga Labs to promote the sale of NFTs featuring various celebrities, including Paris Hilton, The Weeknd, and Snoop Dogg.
The NFTs, which are digital tokens stored on a blockchain, are meant to represent a certain asset in a digital format. The NFTs offered by Yuga Labs were sold using MoonPay’s platform, which allegedly allowed investors to purchase the NFTs without the necessary verification and disclosure requirements.
The lawsuit further alleges that Yuga Labs and MoonPay misrepresented the sale of the NFTs, as well as their value. Specifically, the suit claims that Yuga Labs and MoonPay did not adequately disclose the risks associated with investing in the NFTs, as well as the fees associated with their sale.
Additionally, Yuga Labs and MoonPay allegedly failed to provide investors with accurate information regarding the celebrities whose likenesses were featured on the NFTs.
The investors behind the lawsuit are seeking compensation for the alleged losses incurred as a result of the alleged misrepresentations. They are also seeking an injunction to prevent Yuga Labs and MoonPay from selling any further unregistered securities.
With government enforcement agencies cracking down on all things crypto, and heavy regulation for the sector possibly arriving in the near future, investors will need to increase their diligence when purchasing such new assets as NFTs.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.