this post was submitted on 18 Aug 2023
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Archived version: https://archive.ph/9WPwx

The Sotheby's 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 Sotheby's auction duped investors by giving the Bored Ape NFTs "an air of legitimacy... to generate investors' interest and hype around the Bored Ape brand," the class-action lawsuit claims.

The boost to Bored Ape NFT prices provided by the auction "was rooted in deception," said the lawsuit filed in US District Court for the Central District of California. It wasn't revealed at the time of the auction that the buyer was the now-disgraced FTX, the lawsuit said.

"Sotheby's representations that the undisclosed buyer was a 'traditional' collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience," the lawsuit claimed. Lawsuit plaintiffs say that harmed investors bought the NFTs "with a reasonable expectation of profit from owning them."

Sotheby's sold a lot of 101 Bored Ape NFTs for $24.4 million at its "Ape In!" auction in September 2021, well above the pre-auction estimates of $12 million to $18 million. That's 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 Sotheby's was added as a defendant in an amended complaint submitted on August 4.

Yuga describes its collection of 10,000 Bored Ape NFTs as "unique digital collectibles living on the Ethereum blockchain" that double as a "Yacht Club membership card." The website has some "members-only" areas. "When you buy a Bored Ape, you're not simply buying an avatar or a provably rare piece of art," the NFT collection's website says. "You 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."

Lawsuit: Yuga “colluded” with Sotheby’s

The amended lawsuit alleges that "Yuga colluded with fine arts broker, Defendant Sotheby's, to run a deceptive auction." After the sale, a Sotheby's representative described the winning bidder during a Twitter Spaces event as a "traditional" 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, "Sotheby's transferred the lot of BAYC NFTs to wallet address 0xf8e0C93Fd48B4C34A4194d3AF436b13032E641F3,77 which, upon information and belief, is owned/controlled by FTX," the complaint said. Speculation that FTX was the buyer had been percolating since at least January 2023.

The lawsuit alleges that Yuga Labs and Sotheby's 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 Sotheby's Metaverse, an NFT trading platform opened after the auction, "operated (or attempted to operate) as an unregistered broker of securities."

"FTX has several deep ties to Yuga such that it would be mutually beneficial for both Yuga and FTX (as well as Sotheby's) 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, Sotheby's and FTX, each knew that FTX was the real buyer of the lot of BAYC NFTs at the Sotheby's auction at the time that Sotheby's representatives were publicly representing that a 'traditional' buyer had made the purchase," 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 lawsuit's named plaintiffs are Johnny Johnson, Ezra Boekweg, Mario Palombini, and Adam Titcher. They are trying to get certification of a class consisting of "all investors who purchased Yuga's non-fungible tokens ('NFTs') or ApeCoin tokens ('ApeCoin') between April 23, 2021 and the present." There were over 103,000 account holders of Yuga securities as of December 1, 2022, the lawsuit said.

"While the Executive Defendants made hundreds of millions of dollars, investors were left with NFTs worth a fraction of their artificially inflated value," 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. Sotheby's told CNN this week that the "allegations in this suit are baseless, and Sotheby's is prepared to vigorously defend itself." Yuga Labs similarly called the allegations "completely without merit or factual basis."

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[–] [email protected] 171 points 1 year ago (4 children)
[–] [email protected] 63 points 1 year ago* (last edited 1 year ago)

The C&H people don't fucking pull punches and I love it. A few weeks ago when elmo rebranded twitter he asked people for a new logo and a C&H artist replied with the confederate flag

[–] [email protected] 18 points 1 year ago

way too based from C&H

[–] [email protected] 4 points 1 year ago (4 children)

So, dumb question, but that picture is tiny and I cant read it.

and its not clickable so i can view a bigger version.

and if I zoom the browser in, the image stays the same size.

how is everyone else reading this damn thing?

[–] PrejudicedKettle 4 points 1 year ago

I'm using the Sync app in my case, and tapping the image opens it full screen.

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[–] [email protected] 56 points 1 year ago (1 children)

Who would've thought that an incredibly dubious claim to "ownership" of a JPEG image would fall in value so dramatically?

[–] [email protected] 6 points 1 year ago (1 children)

The amazing thing is that, although they have depreciated by about $190,000 each, they're still selling for $50,000 each. How can they still be valued at that much?

[–] [email protected] 10 points 1 year ago

Money laundering.

[–] [email protected] 40 points 1 year ago (3 children)

If only someone told them... Except you know, literally every person on every social media ever. How did these people just like not look at the social media around these at all??

[–] [email protected] 24 points 1 year ago (1 children)

They did see the criticism; in fact a lot of it was aimed directly at them. But they thought that they were right.

[–] [email protected] 18 points 1 year ago (1 children)

They're going to have a tough time in court proving they were mislead with overwhelming evidence warning that they're dumb as shit

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[–] [email protected] 12 points 1 year ago

Because when idiots see criticism they take it as haters just hating and it strengthens their convictions.

[–] [email protected] 5 points 1 year ago (1 children)

You don’t even need to be told. NFTs were very obviously stupid. I guess it’s true that the fool and his money is easily parted.

[–] [email protected] 4 points 1 year ago

Even they knew it was bs. Their supposed confidence in nfts was just them trying to drive the market up so they could unload it on the next sap. They didn't consider that they were the sap all along. The collapse was faster then crypto because nfts don't even have a real utility. And yes, crypto does have a utility as currency in nitche communities, but most people treated it like commodity.

[–] [email protected] 32 points 1 year ago (3 children)
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[–] [email protected] 30 points 1 year ago (3 children)

Seriously, fuck rich and stupid people.

"Oh no - we invested our money in racist monkey JPEGs ignoring any risk and lost some of it.

Now instead of accepting the loss like most individual investors, we sue to game the system in our favor in yet another way."

[–] [email protected] 7 points 1 year ago

Wait, are they racist? I haven't bothered to look through them though.

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[–] [email protected] 23 points 1 year ago

"Wait, these are just ordinary tulips!"

[–] [email protected] 23 points 1 year ago (3 children)

Can't say they didn't get what they deserved but of course any NFT scammer deserves some jail time too.

[–] ursaUltra 15 points 1 year ago

I am content to watch everyone involved consume each other

[–] [email protected] 14 points 1 year ago (2 children)

NFT buyers were also scammers since their intention was to sell it off to the next patsy

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[–] ArchmageAzor 21 points 1 year ago (2 children)

I'm gonna sue my grocery store, they sold me some ham I didn't like

[–] [email protected] 21 points 1 year ago (1 children)

You are joking, but every grocery shop I go to would gladly reimburse you if you bought some ham you didn't like. They would even ask you what was wrong with it, if there might be a health concern they will do a full recall. If they get too many complaints, they will pull the product. The price of a single ham is easily worth the feedback on the product and the continued loyalty of the customer.

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[–] [email protected] 5 points 1 year ago

I used to work at walmart, in college. I recall once we had someone return a more than half eaten rotisserie chicken. They said it tasted funny... after eating half... probably in their car. It was still luke warm.

[–] [email protected] 21 points 1 year ago* (last edited 1 year ago)

Now they can join the select club of people who are suing NFT makers after being conned into buying them.

[–] [email protected] 20 points 1 year ago

I might switch from index funds to stock picking if I'm too able to get my money back for every bad investment I make

[–] [email protected] 17 points 1 year ago (1 children)

It's cool. It's hip. It's Blockchain! Come on, folks, let's invest in boring and colorful monkeys. You WILL be rich beyond imagination!

[–] [email protected] 11 points 1 year ago

They weren't even uniquely drawn, they just mr potato head combined a handful of components

[–] [email protected] 16 points 1 year ago

Ponzi schemes are generally not good investments

[–] [email protected] 15 points 1 year ago
[–] [email protected] 14 points 1 year ago

Who could have possibly predicted that?

[–] [email protected] 13 points 1 year ago

Looooooooooooooooooooooooool

[–] [email protected] 13 points 1 year ago

This is the best summary I could come up with:


The Sotheby's 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.

"Sotheby's representations that the undisclosed buyer was a 'traditional' collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience," the lawsuit claimed.

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 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, "Sotheby's transferred the lot of BAYC NFTs to wallet address 0xf8e0C93Fd48B4C34A4194d3AF436b13032E641F3,77 which, upon information and belief, is owned/controlled by FTX," the complaint said.

"While the Executive Defendants made hundreds of millions of dollars, investors were left with NFTs worth a fraction of their artificially inflated value," the original version of the complaint in December said.


I'm a bot and I'm open source!

[–] expatriado 11 points 1 year ago* (last edited 1 year ago)

So many things wrong the buyer was aware, starting with they sold too many for too much, future popularity overestimated, low artististic value, etc. What will become a priced collectible is not something you can easily predict, this is Beanie babies all over, the kind of history that likes to repeat.

[–] [email protected] 10 points 1 year ago (1 children)

Scammer: "Buy a Jpeg everyone can download"
Investor: "Sounds like I can get rich with that. How much does one cost?"
Scammer: "20,000 to 50,000"
Investor: "Okay, I take four!"
People download jpegs instead of buying NFTs and making fun of it
Investor: "I lost all my money. I sue you!"

[–] [email protected] 6 points 1 year ago (1 children)

They paid an average of $241,000 for each JPEG.

[–] [email protected] 7 points 1 year ago (4 children)

correction. they paid that much for a url, not a jpeg. the image itself is probably hosted on some server paid for by who knows. Not the buyer of the nft. so they have zero control. They could just stop paying for hosting.

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[–] [email protected] 9 points 1 year ago

These are literally the worst investment possible, because all the value comes from speculation (people buying them to get rich quick). As soon as those buyers get spooked the cones crashing down to zero. With something like a share in a company, that entitled the holder to partial ownership of the company. Even if the company goes bankrupt, you would still get a share in the former assets of the company. You can of course lose money if you buy at a price that is much higher then the actual value due to speculation, but this is limited by the intrinsic value of the company's assets.

[–] [email protected] 8 points 1 year ago (1 children)

This reminds me a great deal of beanie babies....

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[–] [email protected] 6 points 1 year ago
[–] [email protected] 5 points 1 year ago

No shit it's a bad investment LOL

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