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A group of collectors is suing Sotheby's for allegedly misleading investors about the value of Bored Ape Yacht Club (BAYC) NFTs. The lawsuit, which was filed in California on August 4, accuses Sotheby's of colluding with Yuga Labs, the creator of BAYC, to artificially inflate the value of the NFTs.
According to the lawsuit, Sotheby's marketing materials suggested that "legacy art collectors" had purchased BAYC NFTs. However, the reality was that cryptocurrency exchanges and other insiders were the actual buyers. Moreover, the lawsuit alleges that Sotheby's downplayed the risks of investing in NFTs and that it failed to disclose that the winning bidder on the record-breaking $24.2 million sale of 101 BAYC NFTs was actually the now-defunct cryptocurrency exchange FTX.
Sotheby's has denied the allegations, calling the lawsuit "baseless." The auction house said in a statement to Artnews that it is "prepared to vigorously defend itself".
The lawsuit is the latest in a series of legal challenges facing the NFT market. In December, a group of investors sued Yuga Labs, alleging that the company made false and misleading statements about the value of BAYC NFTs. And in January, the U.S. Securities and Exchange Commission (SEC) warned investors about the risks of investing in NFTs.
The lawsuit against Sotheby's is a sign that the NFT market is coming under increasing scrutiny. As the market grows, it is important for investors to do their due diligence before investing in NFTs.
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