Judge Dismisses BAYC NFT Lawsuit, Clarifying U.S. Securities Law
A federal judge in California has dismissed a class-action lawsuit against Yuga Labs, the company behind Bored Ape Yacht Club (BAYC) NFTs and ApeCoin. The ruling clarifies that these NFTs and the associated token do not qualify as securities under U.S. law.
The plaintiffs argued that purchasing these NFTs or tokens satisfied the Howey test, the standard used to determine if an asset counts as a security. However, the judge ruled that the plaintiffs failed to prove this. The judge opined that the offer of potential future benefits from NFTs does not necessarily constitute an investment.
The case involved six Yuga digital assets, including BAYC NFTs, MAYC NFTs, BAKC NFTs, Otherdeed NFTs, Meebits NFTs, and ApeCoin. Yuga Labs has maintained that its NFTs are membership-based collectibles, and the ruling supports this stance. The court dismissed the argument that Yuga formed a 'common enterprise' with NFT purchasers, as their financial outcomes were not directly tied to the company's success.
The ruling provides legal clarity for the NFT market. It makes it less likely that similar projects will face lawsuits or SEC actions if their NFTs are sold for access, perks, or cultural value rather than as investments. The decision may also motivate more NFT artists to emphasize utility and community over the prospect of monetary gain.
The current floor price for a Bored Ape is approximately 8.13 ETH, around $36,600, down from $369,900 in April 2022. The dismissal of this lawsuit provides a clear legal path for NFT creators and investors, allowing the market to grow and innovate without the fear of sudden regulatory changes.
