California Judge Dismisses Lawsuit Against Yuga Labs
A federal judge in California has dismissed a class-action lawsuit against Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC). The ruling confirmed that BAYC NFTs and ApeCoin are not securities under U.S. law.
In a filing dated September 30, Judge Fernando Olguin stated the plaintiffs failed to prove the NFTs or tokens met the Howey test. This test determines if an asset qualifies as a security.
The 2022 lawsuit accused Yuga Labs of defrauding investors and selling unregistered securities. The judge ruled that offering potential future benefits from NFTs does not automatically make them investments.
Key Legal Findings in the Case
- The court rejected the claim that Yuga Labs formed a “common enterprise.”
- NFT buyers paid a one-time fee and traded on third-party platforms like OpenSea.
- Buyers’ financial results were not directly linked to Yuga Labs’ success.
- Statements about NFT prices or trading volumes did not prove buyers expected profits.
- The case involved six Yuga digital assets: BAYC, Mutant Ape Yacht Club (MAYC), Bored Ape Kennel Club (BAKC), Otherdeed NFTs, Meebits NFTs, and ApeCoin.
- Yuga Labs retained commercial rights and charged a creator fee on resales, further separating buyers’ profits from the company’s earnings.
Impact on the NFT Market
This ruling offers legal clarity for NFTs. Tokens sold for access, perks, or cultural value are less likely to be classified as securities. This reduces the risk of future lawsuits or SEC actions against similar projects.
Yuga Labs launched Bored Ape Yacht Club in 2021 and has maintained that its NFTs are membership-based collectibles.
Despite the legal win, the market has cooled since its peak. According to CoinGecko, the current floor price for a Bored Ape is about 8.13 ETH ($36,600), down from 33 ETH ($369,900) in April 2022.
The decision may encourage NFT creators to focus more on utility and community rather than financial gain.
