Is Bored Ape Yacht Club a pump-and-dump scheme? The creators are threatened with a lawsuit

The creators of Bored Ape Yacht Club were accused of pumping NFTs and ApeCoin. According to the lawsuit prepared by the legal firm Scott+Scott, the company unreasonably forced investors to buy its financial products. Yuga Labs allegedly used celebrity advertising to pump up the price of NFT and the token.

Can it turn out that the monkeys are not only bored but also cheating? Let’s try to figure this out. 

What’s happened

According to the statement, the Yuga Labs leadership used celebrity promoters and endorsements to inflate the price of the company’s NFTs and token by generally promoting the growth prospects and change for huge returns on investments to unsuspecting investors. 

“After selling off millions of dollars of fraudulently promoted NFTs, Yuga Labs launched the ApeCoin to further fleece investors,” says the lawsuit. 

Also, reports that once it was revealed that the touted growth was entirely dependent on continued promotion as opposed to actual utility or underlying technology, retail investors were left with tokens that had lost over 87% from the inflated price high on April 28, 2022. 

Scott+Scott is in the preliminary stage of seeking class action participants. The complaint has not yet been sent to court. APE traded at $8.5 after launching on March 17, 2022. On April 28, the token’s price reached $27.5; at the time of writing, it was down to $6.51. The coin has lost about 78% of its peak values.

Are the accusations true?

Some users think the developers’ actions look like a pump-and-dump scheme. It is a mechanism of manipulative price increases in the securities markets, cryptocurrencies, or other similar assets — with their ultimate collapse based on an attempt to increase the value through false, unsubstantiated recommendations. 

The claim described in the lawsuit is quite possible because there are at least a few cases where celebrities have influenced the rise of ApeCoin. One of them happened recently, on May 4, 2022, when the coin grew thanks to Elon Musk. It happened after the businessman changed his Twitter avatar to a collage of Bored Apes. Then he quickly posted a follow-up tweet, hinting that he was trolling the community. Musk showed that he has a significant influence over the cryptocurrency market. 

Many celebrities own Bored Apes tokens, including showman Jimmy Fallon, singer Peris Hilton, rapper Snoop Dogg, and even actor Anthony Hopkins. According to the Winterwatch investigation, they have a way of offloading the risk and setting themselves up for pump and dump. 

“This fleecing is a natural for celebrity culture in that it allows them to get in on pre-pump price for this hot air and promote their name. Whether the celeb is tarnished when the NFT crashes and burns remains to be seen, but like all Ponzi schemes, the association has benefits in the run-up phase,” says the research. 

Here’s a video that shows celebrities who joined the BAYC crowd.

By the way, the collection left the top of the NFT sales ranking a few days ago. After spending a few days outside first place, the hodlers began worrying. A significant reason for the drop in sales can be attributed to increasing losses in trading. According to Crypto Slam data, it has tipped to $1,029,419 after a 23.20% loss after the week.

However, the boring monkey crisis did not last long. While NFT sales continue to fall, the number of BAYC hodlers has increased. There were 114 more in the last week, bringing the total number of Bored Ape Yacht Club owners to 6,591. Experts say that’s good because the more owners, the higher the demand. And the question of the secret of such success and how it is achieved, Yuga Labs will have to answer in court.