A federal judge dismissed a class action lawsuit against Yuga Labs, the company behind the Bored Ape Yacht Club NFT collection, ruling that its digital assets—including Bored Ape NFTs and ApeCoin—do not qualify as securities under the Howey test. Plaintiffs Adonis Real and Adam Titcher had alleged that Yuga Labs colluded with celebrities like Justin Bieber, Madonna, and Steph Curry, as well as talent agent Guy Oseary and crypto platform MoonPay, to inflate prices and violate securities laws. Judge Fernando Olguin found that while the plaintiffs satisfied one prong of the Howey test—expectation of profits from others' efforts—they failed to meet the other requirements, leading to the dismissal.
This ruling matters because it sets a significant legal precedent for how NFTs and cryptocurrencies are classified under U.S. securities law, directly impacting the broader digital art and crypto market. By rejecting the claim that Yuga Labs' assets are securities, the decision provides legal clarity for NFT creators and platforms, potentially limiting future class actions. However, the plaintiffs have until October 10 to file an amended complaint, leaving the door open for further litigation that could reshape the regulatory landscape for digital art assets.