Judge tosses lawsuit against Yuga Labs over failure to satisfy Howey test

A U.S. judge has dismissed a lawsuit against Yuga Labs, asserting that the investor plaintiffs failed to prove that the company's non-fungible tokens (NFTs), specifically the Bored Ape Yacht Club (BAYC) collection, classify as securities under the SEC's Howey Test. Judge Fernando M. Olguin determined that the NFTs were marketed more as digital collectibles than as investment contracts, noting that their characteristics emphasized membership perks rather than future profits. Furthermore, the judge observed that the plaintiffs could not demonstrate a common enterprise or the expectation of profits generated by others, both crucial components of the Howey Test. The ruling highlighted that transactions involving the NFTs did not establish a financial dependency between purchasers and Yuga Labs, thereby reinforcing the stance that the NFTs did not exhibit the attributes of securities. Olguin concluded that any statements made about the NFTs' intrinsic value or market prices did not equate to promises of profit for buyers.

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