Class Action(by Vinamrata Chaturvedi) - 趙永祥的數位歷程檔

A class action is a legal proceeding in which one or more plaintiffs bring a lawsuit on behalf of a larger group, known as the class. Any proceeds from a class-action suit after legal fees, whether through a judgment or a settlement, are shared among all members of the class.

Successful class action cases can result in hefty pre-trial settlements. A lawsuit Enron shareholders filed after the company’s collapse resulted in a $7.2 billion settlement. Another famous class action was the product liability case filed against Toyota for faulty brakes, resulting in a costly recall and an over $1 billion settlement.

Share today's term with your network:

Why is 'Class Action' the Term of the Day?

Mario Tama / Staff / Getty Images

Yuga Labs, the creator of the largest collection of non-fungible tokens (NFTs), Bored Ape Yacht Club (BAYC), could soon face a class action suit alleging it artificially pumped up the price of its crypto assets, leaving its investors with huge losses.

International law firm Scott+Scott announced earlier this month that it was organizing the lawsuit, and that Yuga could be sued for falsely representing Bored Ape NFTs and ApeCoin, the native token of the NFT collection, as securities with guaranteed returns.

According to Scott+Scott, the NFT creator used celebrities to promote and endorse the tokens, which inflated the price. For example, the BAYC collection has been notably endorsed by rapper Snoop Dogg, football star Tom Brady, and influencer Paris Hilton. In 2021, there was a boom in NFTs trading volume, which also resulted in selling the most expensive BAYC digital artwork for $3.4 million.

If the lawsuit is filed, a court decision to view NFTs as securities—or something else—could have significant implications for NFT disclosures and regulations.

-Vinamrata