Archived version: https://archive.ph/9WPwx
The Sothebyâs 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 Sothebyâs auction duped investors by giving the Bored Ape NFTs âan air of legitimacy⌠to generate investorsâ interest and hype around the Bored Ape brand,â the class-action lawsuit claims.
The boost to Bored Ape NFT prices provided by the auction âwas rooted in deception,â said the lawsuit filed in US District Court for the Central District of California. It wasnât revealed at the time of the auction that the buyer was the now-disgraced FTX, the lawsuit said.
âSothebyâs representations that the undisclosed buyer was a âtraditionalâ collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience,â the lawsuit claimed. Lawsuit plaintiffs say that harmed investors bought the NFTs âwith a reasonable expectation of profit from owning them.â
Sothebyâs sold a lot of 101 Bored Ape NFTs for $24.4 million at its âApe In!â auction in September 2021, well above the pre-auction estimates of $12 million to $18 million. Thatâs 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 Sothebyâs was added as a defendant in an amended complaint submitted on August 4.
Yuga describes its collection of 10,000 Bored Ape NFTs as âunique digital collectibles living on the Ethereum blockchainâ that double as a âYacht Club membership card.â The website has some âmembers-onlyâ areas. âWhen you buy a Bored Ape, youâre not simply buying an avatar or a provably rare piece of art,â the NFT collectionâs website says. âYou 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.â
Lawsuit: Yuga âcolludedâ with Sothebyâs
The amended lawsuit alleges that âYuga colluded with fine arts broker, Defendant Sothebyâs, to run a deceptive auction.â After the sale, a Sothebyâs representative described the winning bidder during a Twitter Spaces event as a âtraditionalâ 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, âSothebyâs transferred the lot of BAYC NFTs to wallet address 0xf8e0C93Fd48B4C34A4194d3AF436b13032E641F3,77 which, upon information and belief, is owned/controlled by FTX,â the complaint said. Speculation that FTX was the buyer had been percolating since at least January 2023.
The lawsuit alleges that Yuga Labs and Sothebyâs 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 Sothebyâs Metaverse, an NFT trading platform opened after the auction, âoperated (or attempted to operate) as an unregistered broker of securities.â
âFTX has several deep ties to Yuga such that it would be mutually beneficial for both Yuga and FTX (as well as Sothebyâs) 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, Sothebyâs and FTX, each knew that FTX was the real buyer of the lot of BAYC NFTs at the Sothebyâs auction at the time that Sothebyâs representatives were publicly representing that a âtraditionalâ buyer had made the purchase,â 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 lawsuitâs named plaintiffs are Johnny Johnson, Ezra Boekweg, Mario Palombini, and Adam Titcher. They are trying to get certification of a class consisting of âall investors who purchased Yugaâs non-fungible tokens (âNFTsâ) or ApeCoin tokens (âApeCoinâ) between April 23, 2021 and the present.â There were over 103,000 account holders of Yuga securities as of December 1, 2022, the lawsuit said.
âWhile the Executive Defendants made hundreds of millions of dollars, investors were left with NFTs worth a fraction of their artificially inflated value,â 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. Sothebyâs told CNN this week that the âallegations in this suit are baseless, and Sothebyâs is prepared to vigorously defend itself.â Yuga Labs similarly called the allegations âcompletely without merit or factual basis.â
Yep. Iâm poor, but at least my ethics are intact. I do feel that as I get older, when I look at stuff like crypto, NFTs, and now AI, a part of me goes âam I disgusted by this because itâs unethical bullshit that enriches a minority at the expense of everyone else⌠or am I just turning into my dad and being suspicious of new things?â
Accidentally deleted my own comment instead of editing it, here we go again.
Especially because our parents always had reasons they cited for their suspicion of the New Thing. Am I picking up on valid concerns and Iâm right to be concerned about crypto, NFTs, and AI, or am I eating up conspiracy trash about how talking on a cellphone will significantly increase my chances of having a brain tumor? I think Iâve got valid concerns, but to be fair so did our parents.
To me itâs important to ask âwhat problem is it solvingâ, and âhow did we solve that problem in the pastâ, and âwhat does it costâ.
Crypto currency solves the problem of spending being tracked by a third party. We used to handle this by giving each other paper. The new way involves more time, and a stupendous amount of wasted electricity.
Nfts solve the problem of owning a digital asset. We used to solve this by writing down who owned it. The cost is a longer time investment, and a stupendous amount of wasted electricity.
Generative AI is solving the problem of creative content being hard to produce, and expensive. We used to solve this problem by paying people to make things for us, and not making things if you donât have money. The cost is pissing off creatives.
The first two feel like cases where the previous solution wasnât really bad, and so the cost isnât worth it.
The generative AI case feels mixed, because pissing off creatives to make more profit feels shitty, but lowering barriers to entry to creativity doesnât.
Crypto:
- Solves the problem of money being represented by a number on a centralized bankâs computer, controlled by said bank.
- For a long time already, most money has never been, and will never be, printed or even written down onto paper.
- The new proof protocols donât waste all that energy anymore either.
NFTs:
- Solve the problem of getting a âpublic digital proofâ of owning an asset.
- We still use notaries to do that offline, and are VERY SLOWLY being enhanced with government backed digital signatures.
- The cost is orders of magnitude lower than keeping a notary running (look into that if you donât believe me).
âam I disgusted by this because itâs unethical bullshit that enriches a minority at the expense of everyone else⌠or am I just turning into my dad and being suspicious of new things?â
Depends on how suspicious you get, and how much you learn about the actual thing before making a decision.
Every new thing, from trading shells for fish, to trading USD for GIFs, was new at some point, and someone (a con man) convinced others that it was worth a ton more than it really was. You can look at every new discovery, every new technology, and you will find someone using it to con others; donât even get me started on love potions, radium suppositories, or quantum shields for cellphones.
Crypto, NFTs, AI, all have their grifters, and will keep having them for as long people donât learn how the stuff works⌠which is when grifters will jump onto the next thing. And yes, grifters are an unethical minority who will spew bullshit about anything to enrisg themselves at the expense of others.
That doesnât mean these things donât have value: herbal potions are the precursor to modern medicines, radiation is used both in bombs and in the radiography I got done this morning, quantum effects are used in the transistors of the cellphone Iâm writing this from. Crypto is a great value transfer mechanism, NFTs and smart contracts are a great invention to avoid company lock-in, AI is the best thing since swipe keyboards on a touch screen.
As you grow up, you should grow wary of stuff you donât understand, you should also try to understand new stuff so you can spot whatâs an actual legitimate use that can benefit you.
TBH, unless you got extraordinarily lucky (or had the right connections to get somebody to push your NFTs) you probably would have wound up losing money. âGasâ fees on the Etherium blockchain can get really high, and I found this article that has some really good numbers on median prices for NFT sales. For the time period their data came from (a random week during the NFT gold rush) about %30 of artists sold for prices low enough that they were likely to barely break even or possibly lose money on fees. Virtually no artists made any appreciable money on NFTs even during the biggest hype periods.
