Judge dismissed lawsuit against Yuga labs, rules failing to meet Howey tests
A federal judge recently dismissed a class action lawsuit allegedly from Yuga Labs, the company behind the NFT collection of the boring APT Yacht Club and colluded with several celebrities to exaggerate the price of its products.
On October 1, U.S. District Judge Fernando Olguin discovered that plaintiffs Adonis Real and Adam Titcher failed to prove that digital assets created by Yuga Labs, including the boring APE yacht club NFTS and Cryptocorrency Apecoin, were securities. The judge’s ruling is first of all Court News Services last week.
The boring APE Yacht Club is one of the most successful NFT collections, with celebrity endorsements from Justin Bieber, Madonna, Golden State Warriors point guard Steph Curry and media personality and businesswoman Paris Hilton.
Real and Titcher filed a class action lawsuit in 2022, claiming that the six types of digital assets sold by Yuga Labs are unregistered securities, and the celebrities promoting Yuga Labs products violated federal and state securities laws. The lawsuit also claims Yuga Labs conspired with talent agents Guy Oseary and Moonpay, a platform used to buy and sell cryptocurrencies to mislead and promote and sell NFTS and cryptocurrencies.
In addition to Bieber, Madonna, Curry and Hilton, the list of defendants in the lawsuit includes Mike Winkelmann (an American digital artist known as the “buzzer”), Reddit founder and venture capitalist Alexis Ohanian, NFT collector Amy Wu, Adidas America, Inc., and Sotheby’s and Sotheby’s.
Judge Olguin found that Yuga Labs’ products did not comply with the Howey test, a legal framework created by the Supreme Court that required “1) “1) monetary investments 2) in a common enterprise 3) expecting profits others work hard to get” in order to put some security on certain guarantees.
But whether the judge’s profit in Yuga Labs’ digital assets comes from other people’s efforts is related to Real and Titcher.
“In short, despite satisfying this vice president, the plaintiff failed to satisfy other Howey Prongs and therefore failed to claim that any, some or all of the defendants’ digital assets are safe,” Judge Orkin wrote.
Plaintiffs Real and Titcher must file a third revised complaint by October 10.
Yuga Labs’ representative refused Court News Services, Representatives of Royal and Titcher did not immediately respond to requests for comment.
