NFT Holders Sue Art Gallery
Allegations of Broken Promises and Rug Pull
October 11, 2024 11:52 AM
Reading time: 1 minute, 36 seconds
TL;DR A collective of 36 NFT holders has initiated legal proceedings against Eden Gallery and artist Gal Yosef. They claim that the promised metaverse-based private club and additional perks tied to their NFT investments have not materialized. The lawsuit alleges a lack of delivered promises, branding the project a 'rug pull' scam.
The Alleged 'Rug Pull'
A storm is brewing in the NFT world as a group of 36 holders takes legal action. They have sued Eden Gallery and artist Gal Yosef, accusing them of failing to deliver on promised developments. The project in question, the Meta Eagle Club, was supposed to offer unique benefits in a metaverse-based setting.
Promises Unfulfilled
The Meta Eagle Club, a collection of 12,000 humanlike eagle NFTs, amassed a whopping $13 million. This occurred between February 2022 through November 2023. The lawsuit claims that, despite this financial success, the project did not progress in any substantial manner. Promises of exclusive experiences and perks were allegedly not kept.
The NFT holders were led to believe they would gain access to a club offering raffles, events, and luxurious experiences. These included hot air balloon rides, private jets, and exclusive artworks. However, the plaintiffs argue that only a minor fraction of these promises were fulfilled. They cite only two events and a few signed artworks as the extent of what was delivered.
"Plaintiffs paid substantially more for the NFTs than they were actually worth," they claimed.
The Legal Battle
The plaintiffs argue that they were misled by false claims, causing them to purchase NFTs with inflated expectations. They allege common law fraud, unjust enrichment, and violations of New York General Business Law. The group is seeking damages, injunctive relief, and attorney's fees from the defendants.
Market Repercussions
This legal action is set against a backdrop of broader struggles in the NFT market. Previous lawsuits have highlighted buyer dissatisfaction. For instance, OpenSea faced a class action over unregistered securities contracts, and Dolce & Gabbana dealt with delays in NFT product deliveries. Analysts suggest that a significant portion of NFT collections are struggling to maintain value.
Eden Gallery and Gal Yosef have not responded to requests for comment on this lawsuit. The outcome of this case could have implications for the NFT market and its regulation.
