Sotheby's has been issued with a writ for allegedly misrepresenting the worth of Bored Ape Yacht Club NFTs in a 2021 auction.
Buyers behind a class action claim that the auctioneer’s involvement gave the NFTs “an air of legitimacy” to generate hype and interest around the Bored Ape brand.
Values of Bored Ape branded NFTs have plummeted since 2021 and now change hands for around US$50,000 compared to the US$241,000 on average realised through the auction.
In total, Sotheby’s sold 101 lots reaching a total value of US$24.4 million, well above pre-auction estimates and for a brief period afterwards the price rose only to subsequently tumble.
An original class action launched in December last year sued Bored Ape creator Yuga Labs, four company executives, and celebrity promoters including Paris Hilton, Gwyneth Paltrow, Kevin Hart, Snoop Dogg, Serena Williams, Madonna, Jimmy Fallon, Steph Curry and Justin Bieber.
An amended lawsuit filed on 4 August now includes Sotheby’s as a defendant as well with the suit stating “Yuga colluded with fine arts broker, Sotheby's, to run a deceptive auction."
Sotheby's Metaverse, an NFT trading platform opened after the auction, also "operated (or attempted to operate) as an unregistered broker of securities", the writ alleges.
After the auction, it emerged that the main buyer was the now-bankrupt crypto exchange FTX and its chief Sam Bankman-Fried.
“Given the extensive financial interests shared by Yuga, Sotheby's and FTX, each knew that FTX was the real buyer of the lot of BAYC NFTs at the Sotheby's auction at the time that Sotheby's representatives were publicly representing that a 'traditional' buyer had made the purchase," the lawsuit said.
The class action lawsuit's named plaintiffs are Johnny Johnson, Ezra Boekweg, Mario Palombini and Adam Titcher.
Sotheby's responded when questioned by CNN that "allegations in this suit are baseless, and Sotheby's is prepared to vigorously defend itself".
Yuga Labs has also dismissed the allegations as "completely without merit or factual basis".
FTX is not named in the writ.