Since its debut in April of last year, Bored Ape Yacht Club has successfully established itself and taken a sizable chunk of the NFT market. The collection continues to come in first place in terms of volume. BAYC sales generated 12 million ETH during the last seven days. 3.2 million ETH and 6.9 million ETH, respectively, are displayed in other collections like CryptoPunks and Moonbirds for comparison.
Promotion that was “inappropriate”
But then a shadow appears, making this image darker. Yuga Labs has recently been charged for encouraging its investors to purchase its NTFs in a “inappropriate” manner. They are charged with using the same method to draw ApeCoin purchasers.
The parent business of the Bored Ape Yacht Club is being sued by legal firm Scott+Scott on the grounds that Yuga Labs unfairly exploited investor trust by employing strategies like celebrity promotion. The following is mentioned in the official Scott + Scott document:
- YUGA LABS executives have used celebrity sponsors and endorsements to inflate the price of NFTs and the company’s tokens, typically promoting growth prospects and change for huge capital gains to unsuspecting investors.
Also targeted is ApeCoin
This incident also targets ApeCoin. Midway through March of this year, Yuga Labs debuted its native Ethereum-based token. The launch met with great success. The token reached a high of $26 at the end of April. But since that time, its worth has only decreased. It is presently $6.2.
The law firm made the same argument when asserting that the company introduced ApeCoin in order to “fraud” investors. Additionally, he critiqued the two initiatives’ growth as being solely the result of promotion and their apparent lack of utility:
- After selling millions of dollars of fraudulently promoted NFTs, YUGA LABS launched ApeCoin to continue defrauding investors. Once it was revealed that the advertised growth was entirely dependent on constant promotion (and not the actual usefulness or underlying technology of the coin), individual investors were left with tokens that had lost more than 87% from the inflated price of April 28, 2022.
Users who had losses between April 2022 and June 2022 were urged by the law firm to contact them.
Support for BAYC from the NFT community
However, it appears that the locals support the Bored Ape Yacht Club more than the other yacht clubs. They ultimately characterized the situation as “genuine garbage.” In actuality, players shuffled the cards again right away. They contend that a group of investors who purchased ApeCoin at its peak and are now upset about being “rekt” are the ones who started this lawsuit.
There is a good likelihood that BAYC sales will increase this week despite the harm it poses. The cost of Ethereum gas was close to its yearly low. Collectors typically view these instances as prime opportunities to accumulate reserves.