A federal judge in California has dismissed a class action lawsuit against Yuga Labs, creator of the once-dominant Bored Ape Yacht Club NFT collection, ruling that digital collectibles cannot be considered securities.
Los Angeles-based Judge Fernando M. Holguin, who was appointed to the court in 2013 by former President Barack Obama, ruled Thursday that the Bored Ape NFT does not meet several standards of tests used to determine the security status of financial transactions.
ruled by Holguin boring monkey NFT It should be considered distinct from other NFT collections previously found to have the potential to constitute securities, particularly Dapper Labs’ collection. nba top shot NFT and draft kings NFT—Assume that Plaintiff purchased Bored Apes on a third-party marketplace such as OpenSea or Coinbase, rather than on a marketplace controlled by the NFT issuer.
Bored Ape NFTs cannot trigger the “common business” element necessary for the test used by courts to determine whether assets are securities, Holguin ruled.
“In sum, Plaintiffs do not allege the type of ‘interaction’ between the alleged securities and their unique ‘ecosystems’ that underpinned the logic of Dapper Labs and DraftKings, and therefore do not adequately allege horizontal commonality,” he wrote.
The judge further noted that collected by Yuga Labs Creator royalty fee It suggests that each sale of Bored Ape “severes[the plaintiff’s]property from that of the defendant, who stands to profit even if the plaintiff sells his NFTs at a loss.” NFT issuers rely on creator royalties as a form of revenue and collect a built-in fee (often 10% or more) each time a collectible token is bought or sold.
The court’s logic stands in sharp contrast to legal arguments made by the SEC during the Biden administration, particularly creator royalties. shown assets It was Securities that are encouraged for resale by their creator.
For many years, Yuga Labs has legal conflict Given the company’s prominence in this field, it is negotiating with the federal government over the security status of NFTs. Once it gets red hot status symbol since then faded Still, in terms of value and cultural relevance, Bored Ape NFTs have seen a staggering $7.2 billion worth of trading volume since their launch in 2021.
Earlier this year, Yuga Labs announced that the SEC closed A years-long investigation into the company was part of the Trump administration’s aggressive policies. Encryption advocate Readjust. The SEC also concluded a similar investigation into the NFT market open sea.
However, it’s one thing for the SEC to decline to pursue a specific case against an NFT project, and another for a federal court to issue a final ruling on the issue, as in this week’s Yuga case.
Despite the significance of the ruling, Bored Ape NFTs appear to have been largely unaffected. The collection’s floor price (the price of the cheapest NFT available in the collection) has fallen by 2% in the past 24 hours; $37,337 Currently writing. This is a 90% decrease from the project’s all-time high of $369,900, achieved in April 2022.
A representative for Yuga did not immediately respond. decryptionRequest comments on this story.