- Yuga Labs created the false impression that NFTs had gone mainstream
- Sotheby’s stellar reputation deceived the investors into believing the “Apes” had sustainable value
A group of art investors is suing world-leading art broker and auction house Sotheby’s for alleged collaboration with Yuga Labs to inflate NFT prices during a 2021 auction. The anonymous group originally filed the class action lawsuit against a number of celebrities and influencers in December 2022. Madonna and other prominent celebs were accused of receiving payment to raise the profile of Bored Ape Yacht Club NFTs.
Less than a year later, the California lawsuit has been amended to include Sotheby’s. This has led leading media to raise a relevant question: Is art a creative effort or an asset class?
Yuga Labs created a false impression?
The lawsuit accuses Yuga Labs, the company behind the BAYC collection, of creating the false impression that NFTs had gone mainstream. According to attorney Sean Masson, whose law firm represents the plaintiffs, the latter considered the NFTs a financial asset. He told Quartz in a phone interview:
Masson adds that Sotheby’s stellar reputation deceived the investors into believing the “Apes” had sustainable value. Investors saw the NFT auction at Sotheby’s as a stamp of approval. In his opinion, they were misled to think NFTs were “a valuable asset class” that was worth buying into.
Sotheby’s defense: Not obligated to sell good art
The auction house does not believe it has a fiduciary responsibility to sell exclusively quality art, whose price is guaranteed to remain stable or increase. Sotheby’s VP of communications called the lawsuit allegations “baseless” and assured Quartz Sotheby’s was “prepared to vigorously defend itself.”
The only statement the house ever made publicly was by its co-head of digital art Michael Bouhanna, who testified to increasing interest in NFTs from traditional art investors.
Private art market is loosely regulated
The global private art market is slightly more valuable than the global smartphone market, worth around $580 billion. However, it is loosely regulated. On average, a BAYC piece lost around 80% of its value in two years, leaving investors in the lurch and with huge losses. Analogically, it would be hard to blame a broker for badly performing stock.
