The U.S. Department of Justice (DOJ) has charged two California men in Los Angeles federal court with defrauding investors of more than $22 million in what DOJ describes as the largest non-fungible tokens (NFT) scheme it has ever prosecuted. View the indictment here. Both defendants, aged 23 and hailing from Thousand Oaks, California, were charged with defrauding investors of over $22 million through a series of NFT rug pulls. The term “rug pull” refers to…
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…
We recently reported about the decision by DraftKings to discontinue its NFT Marketplace business. At the time, DraftKings said the decision was due to “recent legal considerations.” Although DraftKings did not elaborate, conventional wisdom was that this was a reference to a decision in July, in federal district court in Massachusetts in Dufoe v. DraftKings, that refused to dismiss a proposed class action suit against DraftKings claiming that the NFTs that DraftKings sold on its…
On August 16, 2024, a federal district court judge in Florida denied in large part the motion to dismiss brought by basketball legend Shaquille O’Neal in the case in which he was sued for his role in Astrals Project, concerning NFTs. An NFT (non-fungible token) can be thought of as a unique cryptographic key contained within a digital token on the blockchain that verifies the corresponding content file as genuine. It is most often used…
In an Announcement on July 30, 2024, DraftKings said that it had decided to discontinue its NFT Marketplace. DraftKings explained that its decision was not made lightly but was due to “recent legal considerations.” Although DraftKings did not elaborate any further on those considerations, last month, a judge in federal district court in Massachusetts refused to dismiss a proposed class action suit against DraftKings claiming that the NFTs that DraftKings sold on its Marketplace were…
We recently reported about the pre-emptive lawsuit that Consensys Software Inc., brought against the United States Securities and Exchange Commission over the regulation of Ethereum. We also previously reported on the SEC’s first NFT enforcement action, against Impact Theory, LLC, a media and entertainment company. The SEC’s second NFT enforcement action, against Stoner Cats, was brought a few weeks later, in September 2023. These two actions by the SEC were a big part of the impetus behind…
Dapper Labs is the company that was known originally for CryproKitties. That ran on the Ethereum blockchain. But Dapper Labs then developed its own blockchain, called Flow, to house NBA Top Shot, its co-venture with the NBA. Top Shot is best known for selling “Moments,” which are often compared to sports trading cards. Dapper Labs clips NBA highlights and turns them into NFTs (non-fungible tokens), which can be bought and sold. In May 2021, a…
We recently reported on the first NFT enforcement action brought by the U.S. Securities and Exchange Commission. On September 13, 2023, the Commission brought its second, against Stoner Cats 2 LLC (SC2), the entity responsible for the cartoon series Stoner Cats. The animated Web3 series featured the voices of Ashton Kutcher, Mila Kunis, Chris Rock, Jane Fonda, Seth MacFarlane and others. The series is about the adventures of cats who learned to talk after inhaling…
We previously reported on the Friel v Dapper Labs decision, which was a first-of-its-kind decision in the U.S. courts, holding that an NFT (non-fungible token) can be a security under U.S. securities law. On August 28, 2023, the U.S. Securities and Exchange Commission brought its first NFT enforcement action, against Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles. It read very much like the SEC’s actions concerning cryptocurrency. As in those…
In the NFT (Non-Fungible Token) frenzy that swept the country a couple of years back, one of the collections that became among the most popular, and very valuable, is known as the Bored Ape Yacht Club (“BAYC”). Its creator, Yuga Labs, sued Ryder Ripps and Jeremy Cahen for trademark infringement. Ripps maintained that Yuga embedded racist and alt-right dog whistles in the BAYC NFTs. Defendants therefore created their own NFT collection, known as the Ryder…