The integration between the world of art and blockchain technology has led to the massive popularity of non-fungible tokens (NFTs). NFTs allow the artist globally to tokenize their work and sell them as digital assets. The growing rise of these NFTs has altered the concept of owning artworks globally, making them more accessible to the community. One such NFT collection gaining immense popularity is the Bored Ape Yacht Club. However, the company’s NFTs prices have recently collapsed, with the investor suing Sotheby’s Holding Inc, the auction house that sold some of the high-range NFTs, accusing them of misleadingly promoting the Bored Ape Yacht Club NFTs.
Background of Bored Ape Yacht Club
The Bored Ape Yacht Club (BAYC) is a collection of 10000 unique Bored Ape NFTs powered by the Ethereum network. The first BAYC NFt was released in April 2021, each representing a unique digital image of a bored-looking ape with computer-generated accessories and features. This NFT project rose to the heights of popularity in 2021 recording high sales at Sotheby’s auction. Even since the company has witnessed a decline in its prices owing to several reasons like the launch of copycat projects and certain regulatory impacts on NFTs.
The Fall of Bored Ape Yacht Club
BAYC NFT prices have fallen victim due to the lawsuit against the company responsible for its NFTs’ auction, Sotheby’s Holding Inc. A group of investors have filed a lawsuit against Sotheby and others in regard to the 2021 promotion and auction of Bored Ape Yacht Club NFTs. The four plaintiffs involved in the lawsuit accuse Sotheby of falsely promoting the NFTs and working alongside creator Yuga Labs to inflate its prices. The auction house is among the 30 defendants in the case. Even famous celebrities like Justin Bieber and Paris Hilton are amidst legal allegations for endorsing the NFT collection without revealing the financial links to it.
As per the report of CoinGecko, a cryptocurrency data aggregator, the price of BAYC NFTs has dropped down to around $52,455 when its lowest price before was over $400,000. The case was triggered back in September 2021 when the auction house sold over 100 NFTs to a single buyer for more than $24 million when the pre-sale estimate was between $12 to $18 million. However, the original lawsuit which was filed in December did not involve the name Sotheby as a defendant but talked about the sale being deceptive and that the auction house was hired by Yuga Labs just to spike investor interests around the Bored Ape brand.
The auction house revealed the buyer as a traditional collector creating an impression that the NFTs had crossed the mainstream audience. They also claimed the accusations to be baseless in their defense to CNN.
While the case against Sotheby continues, the representative celebrities remain silent to CNN requests on sharing their comments. However, the incident highlights the challenges the NFt market is exposed to despite its enormous potential to offer lucrative gains to its investors. Though the outcome of the legal action is unknown, it is definitely going to have a major impact on the NFT market showcasing its uncertainty.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
