A U.S. federal judge in the Central District of California dismissed a 2022 class-action suit, finding that Yuga Labs’ Bored Ape Yacht Club (BAYC) non-fungible tokens ( NFTs) do not meet the Howey test for securities.
Court Rules BAYC NFTs Are Not Securities
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The ruling concluded plaintiffs failed to show a common enterprise or a reasonable expectation of profits tied to Yuga Labs’ efforts; the court emphasized NFTs were marketed as collectibles and membership perks, sales occurred through third-party marketplaces, and creator royalties and decentralized distribution diminished any issuer-dependent profit expectation. The decision narrows the scope of securities law for NFTs and could limit similar investor claims against creators and marketplaces.
