We have previously written about the recent decision that allowed a lawsuit to go forward against Shaquille O’Neal and others related to his role in the Astrals Project. Shaq and his son, Myles O’Neal, were founders of the Astrals Project. As alleged in the lawsuit, Astrals Project is a collection of 10,000 NFTs 3D avatars (designed by artist Damien Guimoneau), which Plaintiffs alleged was aimed to promote investment in a virtual world in which users could socialize, play, and interact with other users. Another critical pillar of the Astrals Project was the creation of a decentralized autonomous organization (DAO) for “incubating innovative projects.” The Galaxy (GLXY) token is the governance token of this DAO.
The lawsuit alleged that Shaq was the public face of Astrals and used his celebrity influence to encourage investors to purchase the NFTs. In the wake of the FTX collapse, O’Neal, on the community message board Discord, sent a gif from The Wolf of Wall Street that read, “I’M NOT F^^^ING LEAVING.” Plaintiffs allege that O’Neal then fled the project and the value of the Astrals Financial Products plummeted.
According to the motion for approval of the settlement agreement, “the Settlement was reached after informed, extensive arm’s-length negotiations between experienced counsel, and multiple mediation sessions with an experienced and respected mediator, Howard Tescher.” In explaining why the settlement agreement was a fair one, Plaintiffs noted that there was a risk of an unsuccessful outcome because of numerous, “hotly contested” issues, such as: “(i) whether the Astrals Financial Products are securities; (ii) whether Settling Defendants can be held liable as ‘sellers’ of the Astrals Financial Products; (iii) whether claims arising from purchases of GLXY tokens made on or before May 23, 2022 are time-barred; (iv) whether Plaintiffs’ claims can be adjudicated on a class-wide basis; and (v) whether sales of the GLXY tokens were domestic transactions.” Another factor in favor of settling was that Astrals recently announced that bankruptcy seemed inevitable.
Shaq and the other settling defendants agreed to pay $11 million. Almost $3 million will be paid to the plaintiffs’ lawyers. The balance will be paid to the Settlement Class Members, net the costs of administration of the claims and notice process. In exchange, the defendants will obtain a full release, thereby ending these claims against them. If there are remaining funds after payment to the class members, it will be paid to the non-profit organization Americans for Financial Reform.
