Sotheby’s Added as Defendant in NFT Class-Action Lawsuit

Sotheby’s has been named as a defendant in an ongoing class-action lawsuit concerning an alleged scheme to deceive investors in non-fungible tokens (NFTs). According to an amended complaint filed with the Central District Court of California, plaintiffs claim that the auction house colluded with Yuga Labs, the creator of Bored Ape Yacht Club (BAYC) NFTs, to artificially inflate the value of the digital assets.

The allegations stem from an online auction held in September 2021, where Sotheby’s sold 101 BAYC NFTs for $24.2 million, surpassing the presale estimate and setting a record for crypto art. The lawsuit accuses Sotheby’s of engaging in deceptive practices by claiming that legacy art collectors were becoming interested in NFTs. The plaintiffs allege that Sotheby’s created an impression that the market for BAYC NFTs had moved into the mainstream, while downplaying the potential for a market bubble.

The suit also claims that Sotheby’s continued to promote the hype surrounding the sale. It is alleged that Max Moore, Sotheby’s head of contemporary art auctions, falsely stated on Twitter that the winning bidder was a traditional art collector, when in reality it was the now-defunct cryptocurrency exchange FTX.

The lawsuit, which was originally filed in December, also names Yuga Labs and several celebrities including Madonna, Paris Hilton, Justin Bieber, Jimmy Fallon, and Mike “Beeple” Winkelmann as defendants. The plaintiffs accuse Yuga Labs of artificially inflating NFT prices through paid celebrity endorsements.

Sotheby’s has responded to the allegations, stating that they are baseless and that the company is prepared to vigorously defend itself. The plaintiffs are seeking more than $5 million in compensation.

The case is numbered 2:22-cv-08909-FMO-PLA.