The Biggest Lawsuits Dominating the NFT Space Today

To say the past few months have been utter chaos in Web3 would be a massive understatement. It’s almost as if the crypto and NFT bear market hasn’t been enough of an existential threat. With thefts, rug pulls, and even insider trading dominating the worst of 2022’s Web3 headlines, it’s no wonder that one word has been trending to dangerous heights in the space over the past months.

That word? Lawsuits. Even the threat of one has been enough to cause a stir in Web3, considering how a potential suit against crypto exchange Binance flooded recent headlines.

With so many bad apples (or alleged ones) causing damage in the space, it makes sense that there’d be a heavy price to pay for all that wrongdoing. Case in point, FTX founder SBF has finally been arrested following his direct involvement in the crypto exchange’s public collapse. Unfortunately, it doesn’t end there. Here’s a quick roundup of some of the most significant lawsuits we’ve seen in the space you need to know about.

FTX’s celebrity endorsers

Nearly a month after the fall of FTX, many Web3 investors are still left reeling from the cumulative multi-billion dollar loss — and Edwin Garrison wants justice for all of them. The Oklahoma resident is leading a class-action lawsuit against the many celebrities who endorsed the dethroned marketplace, including Warriors guard Steph Curry, Gisele Bündchen, Shaq, and Tom Brady.

A class-action suit occurs when one or more plaintiffs bring a lawsuit on behalf of a larger group — AKA a “class.” The settlement (minus legal fees) is shared between all members of this group. In this case, this group amounts to “thousands, if not millions, of consumers nationwide,” according to the complaint filed in federal court in South Florida.

Garrison hopes to hold the now-bankrupt FTX accountable for targeting “unsophisticated investors” via celebrity endorsements, resulting in more than $11 billion in damages. While Sam Bankman-Fried’s recent arrest may offer a small comfort to lose who lost their life savings, it’s a far cry from getting their money back.

Yuga Labs in the hot seat

FTX wasn’t the only company hit with a class action suit in December 2022. Bored Ape Yacht Club creators Yuga Labs was named in a suit filed in California that alleges they used celebrity endorsers to artificially inflate the value of Apecoin, resulting in “staggering losses.” Named defendants in the suit include Jimmy Fallon, Gwyneth Paltrow, Serena Williams, Justin Bieber, Madonna, and, again, Steph Curry, among other celebrities who have publicly vouched for BAYC in the recent past.

Central to these recent complaints are how celebrities have, at times, passed off advertisements for these NFT projects as mere casual endorsements. In a November 2021 episode of “The Tonight Show,” Jimmy Fallon candidly recounted buying his first NFT — a Bored Ape — during a segment with crypto artist Beeple. A segment that the lawsuit alleges was, in fact, a paid advertisement due to Fallon’s financial stake with the parties mentioned therein.