The company Yuga Labs, which created the widely used, well-liked NFT collection Bored Ape Yacht Club, might soon find itself on the losing end of a big case.
According to Decrypt, a New York law firm is launching a class-action lawsuit against the company running the crypto market, accusing it of inflating the price of both BAYC NFTs and the formation’s crypto token, ApeCoin, by allowing them to be used as expansion aid in bound recoveries despite main value failures.
Retail investors were left with tokens that had lost over 87 percent from the exorbitant rate high once it was revealed that the claimed expansion was fully conditional on constant growth (as opposed to actual utility or the underlying technology), according to the firm’s call to arms.
The corporation claims that these properties are, in reality, securities, which is significant. Although it has been rattling its sabres, the SEC has not yet designated NFTs as such, thus this recent case is merely one of many cautionary tales for the cryptocurrency industry that may set new precedents.
Following the crypto crash, the topic of regulating digital properties has been the main topic of conversation. However, some experts don’t necessarily think that the SEC is equipped or prepared to cope with whatever rule-making may entail.
“I see very, very, very little likelihood that the SEC is going to want to step in there and… characterize [BAYC] as a security,” Brian Fyre, a University of Kentucky law professor, said Decrypt. “I believe they’re going to withstand that tooth and nail because that would create a big can of worms for them and urge them to govern all way of other things that they don’t like to be regulating.”
As Decrypt notes out, the SEC has never been particularly focused on regulating the art industry, so regulating NFTs would likely signal that the organization may wish to regulate the art market as a whole. It may be more likely that the commission names ApeCoin as security in this particular example, but forbids doing the same for digital art.