Yuga Labs, the company that created the largest non-fungible token (NFT) project Bored Ape Yatch Club (BAYC) may face a lawsuit.
Law firm Scott+Scott alleges Yuga Labs improperly induced investors to buy the company's NFTs and its native coin ApeCoin.
In addition, the firm also allegedly used celebrities as endorsements and promoters to increase the price of its NFTs by promising high returns.
Celebrities such as rapper Snoop Dogg, football star Tom Brady and influencer Paris Hilton are among the celebrities who own and endorse the BAYC collection. BAYC's most expensive digital artwork sold for $3.4 million late last year.
However, the widespread decline in financial markets this year has driven down prices for crypto-assets and NFTs.
The average price of BAYC sold over the past seven days is now $115,000, according to data from NFT Stats, down from around $425,000 three months ago.
Even so, Scott+Scott is still in the early stages of finding plaintiffs who suffered losses related to purchases of Yuga-backed NFTs and tokens from April to June.
In addition to the popular NFT BAYC, Yuga Labs launched ApeCoin in March via the Ethereum blockchain aiming to power the upcoming metaverse ecosystem.
However, Scott+Scott slammed the firm's move to introduce a community-focused token.
ApeCoin is currently trading at $5.80, down significantly from the all-time high it hit on April 28, $26.70.
