The Newsroom

Celebrities – they’re just like us (or so they say), always eager to cash in on the latest trend. Ever since NFTs broke into the mainstream in 2021, the rich and famous have been quick to hitch their wagon to these digital assets. From Justin Bieber’s Bored Ape and its ever fluctuating value (reportedly worth $1.3 million in 2022, down to just $59,000 now ) to Snoop Dogg’s Snoop Dogg Passport Series , an NFT tour poster that evolves with each stop along his tour, to Mila Kunis’s Web3 backed animated series that allows NFT holders to shape its stories, celebrities have jumped into the world of NFTs without hesitation.

Unlike the rest of us, celebrities’ ways of capitalizing on a trend often involve using their influence in one way or another over their vast audience of everyday people. Sometimes, however, they’re not as careful as they should be of the legal impact of their actions. Below is a roundup of a few notable lawsuits and other controversies involving NFTs, crypto and celebrities.

Paris Hilton, Jimmy Fallon and More

In December 2022, a class action lawsuit was filed against a slew of celebrities, including Madonna, Paris Hilton, Jimmy Fallon, Serena Williams, Justin Bieber, Gwyneth Paltrow and Kevin Hart, among others, alleging that the defendants banded together in a “vast scheme” “to misleadingly promote and sell the Yuga Financial Products.” The Yuga Financial Products at issue in this ongoing class action lawsuit include the Bored Ape Yacht Club NFT collection and ApeCoins, among other products. Specifically, the class action plaintiffs allege that Yuga Labs, also a defendant in the case, discreetly paid certain celebrities and other well known figures to “purchase” the Yuga Financial Products in order to manufacture what appeared to be real interest in the Products from high profile collectors and, thereby, manipulate the plaintiff class into purchasing more of the Products.

Shaq

Just shy of two months ago, former NBA legend Shaquille O’Neal found himself the target of another class action lawsuit , this one filed in connection with the ASTRALs NFT collection he founded with his son last year. The named plaintiff in the newly filed lawsuit, Daniel Harper, alleges that Shaq violated Section 15 of the Securities Act of 1933 by offering and selling unregistered securities (i.e. the ASTRALs NFTs), causing Mr. Harper and other similarly situated plaintiffs to not only invest in the Astrals Project, but to suffer enormous investment losses. The lawsuit is in its infancy. O’Neal’s defense team has not filed any substantive response with the court yet, though they have indicated that they intend to file a motion to dismiss shortly.

Kim Kardashian

Last fall, Kim Kardashian found herself at the center of an ongoing SEC investigation. The US Securities and Exchange Commission announced charges against Kardashian in October 2022 “for touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.” Specifically, the SEC found that she had failed to disclose to her followers that she was paid a quarter of a million dollars in exchange for promoting EMAX tokens. Kardashian reportedly agreed to settle the charges against her by paying more than five times the amount she had received in penalties, disgorgement and interest, and by cooperating with the SEC’s ongoing investigation.

Lindsay Lohan, Soulja Boy, Akon and More

Apparently having failed to learn from Kim Kardashian’s mistake, another slew of celebrities found themselves facing SEC charges in March of this year for illegally touting crypto asset securities, specifically Tronix and BitTorrent, to their followers without disclosing that they were being compensated. They each reportedly reached settlements with the SEC which included payment of fines and disgorgement of their compensation. If any celebrities are reading this – please learn from their mistakes. If you’re being paid to promote crypto asset securities, don’t forget to disclose that to your followers!

Stay tuned for more NFT news from the Newsroom.

By: Kimberly L. Barcella