A group of 36 non-fungible token (NFT) holders have sued an art gallery and artist who made their NFTs, claiming they failed to follow through on a metaverse-based private club and other promised perks.
In an Oct. 9 complaint filed in a New York federal court, the group claimed Eden Gallery and artist Gal Yosef’s project “was a ‘rug pull’” scam.
The NFT collection, the Meta Eagle Club, sold 12,000 unique humanlike eagles and collected $13 million between February 2022 through November 2023.
But the group alleged nothing “substantial” was ever done to “actually build the Meta Eagle Club in any real way,” despite updates from the team behind the project claiming otherwise.
Source: Meta Eagle Club- GalyVerse
The lawsuit also alleged the people building the project had no “experience or expertise related to blockchain and smart contract development and engineering, and in fact, did not have any experience related to software development or engineering at all.”
NFT holders were promised entry into a Meta Eagle Club and a range of perks.
The Meta Eagle Club’s roadmap advertised that NFT holders could enter raffles to win entry to Eden Gallery events, hot air balloon rides, private jets, helicopters, exclusive collectible artworks, and more.
But the group claimed only “a handful of tickets to the experiences promoted extensively in their statements” were provided, along with two Galyverse events and 11 physical artworks signed by Gal Yosef.
The complaint said on Jan. 12, 2023, a successful vote was held on Eden Gallery’s Discord to reallocate the budget of the remaining items from the Roadmap into “alternative utilities,” including keeping a marketplace active. The shift in priorities was blamed on the market downturn.
The group claimed the gallery and Yosef pledged to create more art to populate an online world called the Galyverse, which they alleged would see members’ investments in the club “increase, and they would receive dividend-like digital assets as long as they were members.”
Perks promised for tokenholders in the Meta Eagle Club. Source: Galyverse
They claimed this caused investors to buy the eagle NFTs based on “materially false information and suffer losses because the Meta Eagle Club NFTs had no value” because the promises “associated with creating their value” were never fully fulfilled.
“As a result, Plaintiffs paid substantially more for the NFTs than they were actually worth,” the group claimed.
Eden Gallery and artist Yosef are accused of common law fraud, unjust enrichment, and violating New York General Business Law.
The group is seeking damages to be decided by the court, injunctive relief, and attorney’s fees.
Eden Gallery and Yosef didn’t immediately respond to a request for comment.
Related: Dapper Labs’ $4M settlement reaffirms NBA NFTs aren’t securities: CEO
This isn’t the first lawsuit to be launched due to NFT buyer remorse.
In a Sept. 19 suit, two OpenSea users proposed a class action against the NFT marketplace, claiming it sold unregistered securities contracts after OpenSea received a Wells notice from the Securities and Exchange Commission.
In May, a disgruntled customer filed a class-action lawsuit against Italian fashion brand Dolce & Gabbana and digital assets platform UNXD for alleged delays in delivering NFT products caused the assets to lose most of their value.
The broader NFT market is still struggling to regain ground and the highs of previous years, with an Aug. 20 report by NFT Evening analysts suggesting 96% of about 5,000 NFT collections they examined were dead in 2024.
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By Cointelegraph.com News
Source: Cointelegraph.com News
