Case 2:22-cv-08909-FMO-PLA Document 1 Filed 12/08/22 Page 1 of 95 Page ID #:1
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`Case
`
`John T. Jasnoch (CA 281605)
`Wlasnoch@scott-scott.com
`COTT+SCOTT ATTORNEYSAT LAW LLP
`600 W. Broadway, Suite 3300
`San Diego, CA 92101
`Tel.: 619-233-4565
`Fax: 619-236-0508
`
`Counselfor Plaintiffs and the Proposed Class
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`UNITED STATES DISTRICT COURT
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`CENTRALDISTRICT OF CALIFORNIA
`
`WESTERN DIVISION
`
`ADONIS REAL and ADAM TITCHER,
`Individually and on Behalf of All Others
`Similarly Situated,
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`Case No. 2:22-cv-08909
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`CLASS ACTION COMPLAINT
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`Plaintiffs,
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`Vv.DEMANDFORJURYTRIAL
`YUGALABS,INC., WYLIE ARONOW,
`GREG SOLANO, KEREM ATALAY,
`ZESHANALI, NICOLE MUNIZ,
`JASMIN SHOEMAKER, PATRICK
`EHRLUND, CHRISTOPHER LYONS,
`ALEXIS OHANIAN, AMY WU, MAARIA
`BAJWA, DEAN STEINBECK, GUY
`OSEARY, MIKE WINKELMANN,
`MADONNA LOUISE CICCONE,PARIS
`HILTON, JAMES FALLON, ELECTRIC
`HOT DOG,INC., UNIVERSAL
`TELEVISION, LLC, JUSTIN BIEBER,
`GWYNETH PALTROW, SERENA
`WILLIAMS, THOMAS PENTZ, AUSTIN
`RICHARD POST, CALVIN BROADUS
`JR., KEVIN HART, ALEXANDER
`PALL, ANDREW TAGGART,
`WARDELL STEPHEN CURRYII,
`NAYVADIUS WILBURN CASH, ABEL
`TESFAYE, KHALED MOHAMMED
`KHALED,ADIDAS AMERICAINC.,
`ADIDAS VENTURE B.V., IVAN SOTO-
`WRIGHT, and MOONPAYUSALLC,
`
`Defendants.
`
`
`CLASS ACTION COMPLAINT
`
`2:22-cv-08909
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`

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`Plaintiffs Adonis Real and Adam Titcher, individually and on behalf ofall
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`others similarly situated, bring this action against Yuga Labs, Inc. (“Yuga” or the
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`“Company’”’), Wylie Aronow, Greg Solano, Kerem Atalay, Zeshan Ali, Nicole
`
`Muniz, Jasmin Shoemaker, Patrick Ehrlund, Christopher Lyons (the “Executive
`
`Defendants’’), Alexis Ohanian, Amy Wu, Maaria Bajwa, Dean Steinbeck (the “Ape
`
`DAO Board Defendants”), Guy Oseary, Mike Winkelmann, Madonna Louise
`
`Ciccone, Paris Hilton, James Fallon, Electric Hot Dog, Inc., Universal Television,
`
`LLC, Justin Bieber, Gwyneth Paltrow, Serena Williams, Thomas Pentz, Austin
`
`Richard Post, Calvin Broadus, Jr., Kevin Hart, Alexander Pall, Andrew Taggart,
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`Wardell Stephen Curry II, Nayvadius Wilburn Cash, Abel Tesfaye, Khaled
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`Mohammed Khaled, adidas America Inc., adidas Ventures B.V. (the “Promoter
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`Defendants’), Ivan Soto-Wright, and MoonPay USA LLC (““MoonPay,”and together
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`with Ivan Soto-Wright,
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`the “MoonPay Defendants”)
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`(collectively, with the
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`Company, the Executive Defendants, Ape DAO Board Defendants, and the Promoter
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`Defendants, the “Defendants’’). The following allegations are based upon personal
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`knowledgeasto Plaintiffs’ own facts, upon investigation by Plaintiffs’ counsel, and
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`upon information and belief where facts are solely in possession of Defendants.
`
`I.
`
`NATUREOF THE CASE
`
`“Celebrities and NFTs Are a Match Madein Hell...
`Somehow, star endorsements havefound a new low.’
`-Amanda Mull, The Atlantic
`
`
`3
`
`1.
`Plaintiffs bring this action on behalf of all investors who purchased
`Yuga’s non-fungible tokens (“NFTs”) or ApeCoin tokens (“ApeCoin”)' between
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`April 23, 2021 and the present (the “Relevant Period”), and were damagedthereby.
`
`Yuga’s various collections of NFTs (including, but not limited to, the Bored
`!
`Ape Yacht Club NFT collection), ApeCoins, and virtual land in the Otherside are
`collectively referred to as the “Yuga Financial Products”or the “Yuga securities.”
`1
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`CLASS ACTION COMPLAINT
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`

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`2.
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`Celebrity promotions of cryptocurrencies are fraught with problems. As
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`the U.S. Securities and Exchange Commission (“SEC”) previously stated:
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`“Celebrities and others are using social media networks to encourage the public to
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`purchase stocks and other investments. These endorsements may be unlawfulif they
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`do not disclose the nature, source, and amount of any compensation paid, directly or
`2 According to The
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`indirectly, by the company in exchange for the endorsement.
`
`Atlantic: “Celebrity endorsements—ofa product, a brand, an idea, a haircut—have
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`been around for ages, but they’ve become especially thick on the ground in recent
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`years, as stars have developed their own direct-advertising channels on social media.
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`For people with somethingtosell, a celebrity’s fan base provides an easy, responsive
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`audience.”?
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`3.
`
`This case epitomizes these concerns as it involves a vast scheme
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`between a blockchain start-up company, Yuga Labs, Inc. (“Yuga”), a highly-
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`connected Hollywood talent agent (Defendant Guy Oseary), and a front operation
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`(MoonPay), whoall united for the purpose of promoting andselling a suite ofdigital
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`assets. The executives at Yuga and Oseary together devised a plan to leverage their
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`vast network of A-list musicians, athletes, and celebrity clients and associates to
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`misleadingly promote andsell the Yuga Financial Products.
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`4.
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`_Yuga’s flagship NFT collection, the so-called Bored Ape Yacht Club
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`(“BAYC”), and related brand rely heavily on the perception that “joining the club”
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`(i.e., buying a BAYC NFT)brings investors status and provides them access to
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`events, benefits, and other lucrative investment opportunities exclusive to BAYC
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`holders. The exclusiveness of BAYC membership was entirely based on the
`
`Statement, SEC Statement Urging Caution Around Celebrity Backed ICOS,
`U.S. SEc. & EXCH. COMM’N (Nov. 1, 2017), https:/Awww.sec.gov/news/public-stat
`ement/statement-potentially-unlawful-promotion-icos.
`3
`Amanda Mull, Celebrities andNFTs Are a Match Made in Hell, THE ATLANTIC
`(Feb.
`4,
`2022),
`available
`at
` https://www.theatlantic.com/technology/archi
`ve/2022/02/nft-jimmy-fallon-paris-hilton-millionaire/621486/.
`2
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`CLASS ACTION COMPLAINT
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`inclusion and endorsements of highly influential celebrities. But this purported
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`interest in, and endorsementof, the BAYC NFTsby high-profile taste makers was
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`entirely manufactured by Oseary at the behest of the Executive Defendants.
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`5.
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`In order to make the promotion of, and subsequentinterest in, the BAYC
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`NFTsappearto be organic (as opposedto being solely the result of a paid promotion),
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`the Company needed a wayto discreetly pay their celebrity cohorts. To do this,
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`Oseary tapped into a different part of his network:
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`the MoonPay Defendants.
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`Oseary’s venture capital firm, Sound Ventures, was one of the early investors in
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`MoonPay, along with, inter alia, Defendants Justin Bieber, Paris Hilton, Jimmy
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`Fallon, Gwyneth Paltrow, Serena Williams, Austin Post, Thomas Pentz, Calvin
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`Broadus, Jr., Kevin Hart, Alexander Pall, Andrew Taggart, Wardell Stephen Curry
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`II, Nayvadius Cash, and Abel Tesfaye. MoonPay purports to be a white-glove service
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`designed to help the super-rich and celebrities buy NFTs “‘withoutall the hassle of
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`setting up a wallet, buying crypto, using that crypto to purchase an NFT and then
`taking custody ofit.” In truth, the Executive Defendants and Oseary used their
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`connections to MoonPayandits service as a covert way to compensate the Promoter
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`Defendants for their promotions of the BAYC NFTs without disclosing it
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`to
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`unsuspecting investors.
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`6.
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`Defendants’ promotional campaign was wildly successful, generating
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`billions of dollars in sales and re-sales. The manufactured celebrity endorsements
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`and misleading promotions regarding the launch of an entire BAYC ecosystem (the
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`so-called Otherside metaverse) were able to artificially increase the interest in and
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`price of the BAYC NFTsduring the Relevant Period, causing investors to purchase
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`these losing investmentsat drastically inflated prices.
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`Ryan Weeks, MoonPay has quietly set up a concierge service to help
`4
`celebrities buy NFTS, THE BLOCK (Nov. 5, 2021), https://www.theblock.co/post/12
`5483/moonpay-concierge-celebrities-nft?utm_source=rss&utm_medium=rss.
`3
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`CLASS ACTION COMPLAINT
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`7.
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`The staggering profits of the BAYC NFTs were not enough for the
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`Executive Defendants. Next, they cut out the artifice of the NFT altogether and went
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`a more direct route to making money: they created their own out of thin air. The
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`Executive Defendants minted digital assets called ApeCoins and promoted that
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`BAYC NFT owners would receive an airdrop of ApeCoins for membership in the
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`club.
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`In doing so, the Executive Defendants, Oseary, and the Ape DAO Board
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`Defendants sought to obscure their sales of their own massive ApeCoin allocations
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`directly to retail purchasers. At no point did any of the Defendants register these
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`securities with the SEC.
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`8.
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`In addition, Executive Defendants Aronow, Solano, Atalay, and Ali
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`disguised their control of Yuga to avoid scrutiny and facilitate this scheme. This
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`conspiracy among the Executive Defendants and Oseary, then carried out with
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`assistance of the Promoter Defendants and the MoonPay Defendants, raked in
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`millions for them all. Meanwhile, investors were left with staggering losses.
`
`9.
`
`Plaintiffs bring this class action on behalf of themselves and an
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`objectively identifiable Class consisting of all investors that purchased the Yuga
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`Financial Products between April 23, 2021 and the present.
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`Il.
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`PARTIES
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`A.
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`Plaintiffs
`
`10.
`
`PlaintiffAdam Titcher (“Titcher’”) is a resident and citizen of California.
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`During the Relevant Period, Titcher purchased a Mutant Ape Yacht Club (“MAYC’”’)
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`NFT via the U.S.-based NFT exchange OpenSea. Titcher also purchased an
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`Otherdeed NFT associated with the Yuga metaverse, Otherside, via the U.S.-based
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`NFT exchange on OpenSea. Titcher purchased the Yuga securities in reliance on the
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`misleading promotions from the Company and the Promoter Defendants (described
`
`in detail below), and he suffered investmentlosses as a result of Defendants’ conduct.
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`11.
`
`Plaintiff Adonis Real (‘Real’) is a resident and citizen of Florida.
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`During the Relevant Period, Real purchased ApeCoin tokens via the U.S.-based
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`4
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`CLASS ACTION COMPLAINT
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`cryptocurrency exchange Coinbase. Real purchased ApeCoin tokensin reliance on
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`the misleading promotions from the Company and the Promoter Defendants
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`(described in detail below) and suffered investmentlosses as a result of Defendants’
`
`conduct.
`
`B.
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`Defendants
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`12. Defendant Yuga Labs,
`
`Inc.
`
`(“Yuga”)
`
`is a Delaware corporation,
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`registered on February, 8, 2021, with its headquarters located at 1850 Towers
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`Crescent Plaza, Suite 200, Tysons, VA 22182. On September 16, 2022, Yuga
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`registered with the California Secretary of State to transact business within
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`California.
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`13. Wylie Aronow (“Aronow’’) is a resident and citizen of South Carolina,
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`living in Mount Pleasant, South Carolina. Aronow is the co-founder/creator of the
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`Company, served as a consultant and spokesman for the Company,exercised control
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`over the Company and directed and/or authorized, directly or indirectly, the sale
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`and/or solicitations of Yuga Financial Products to the public.
`
`14. Defendant Greg Solano (“Solano”) is a resident and citizen of Florida,
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`living in Fort Lauderdale, Florida. Solanois the co-founder/creator of the Company,
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`served as a consultant and spokesman for the Company, exercised control over the
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`Company and directed and/or authorized, directly or indirectly,
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`the sale and/or
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`solicitations of Yuga Financial Products to the public.
`
`15. Kerem Atalay (“Atalay’’) is a resident and citizen of Missouri, living in
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`St. Louis, Missouri. Atalay is the co-founder/creator of the Company, served as a
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`developer, consultant and spokesman for the Company, exercised control over the
`
`Company and directed and/or authorized, directly or indirectly,
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`the sale and/or
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`solicitations of Yuga Financial Products to the public.
`
`16.
`
`Zeshan Ali (“Alt”) is a resident and citizen of California, living in Los
`
`Angeles, California. Ali is the co-founder/creator of the Company, served as a
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`developer, consultant and spokesman for the Company, exercised control over the
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`3
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`CLASS ACTION COMPLAINT
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`Company and directed and/or authorized, directly or indirectly,
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`the sale and/or
`
`solicitations of Yuga Financial Products to the public.
`
`17. Defendant Nicole Muniz (“Muniz”) is a resident and citizen of New
`
`York, living in Brooklyn, New York. Muniz is the Chief Executive Officer (“CEO”)
`
`of the Company,served as a consultant and spokesman for the Company,exercised
`
`control over the Companyand directed and/or authorized, directly or indirectly, the
`
`sale and/or solicitations of Yuga Financial Products to the public.
`
`18.
`
`Defendant Jasmin Shoemaker (“Shoemaker’) is a resident and citizen
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`of New York, living in Brooklyn, New York. Shoemakeris the Chief Operating
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`Officer (“COO”) of the Company, served as a consultant and spokesman for the
`
`Company, exercised control over the Company and directed and/or authorized,
`
`directly or indirectly, the sale and/or solicitations of Yuga Financial Products to the
`
`public.
`
`19. Defendant Patrick Ehrlund (“Ehrlund”) is a resident and citizen of New
`
`York, living in Brooklyn, New York. Ehrlundis the Chief Creative Officer (“CCO”’)
`
`and minority partner of the Company, served as a consultant and spokesman for the
`
`Company, exercised control over the Company and directed and/or authorized,
`
`directly or indirectly, the sale and/or solicitations of Yuga Financial Products to the
`
`public.
`
`20. Defendant Christopher Lyons (“Lyons”) is a resident and citizen of
`
`Florida, living in Plantation, Florida. Lyons served as a board member, consultant
`
`and spokesman for the Company,exercised control over the Company and directed
`
`and/or authorized, directly or indirectly,
`
`the sale and/or solicitations of Yuga
`
`Financial Products to the public.
`
`21. Defendant Alexis Ohanian (“Ohanian’’) is a resident and citizen of
`
`Florida, living in Jupiter, Florida. Ohanian served as a board memberof the Ape
`
`DAO,servedas a consultant and spokesmanfor the Company,exercised control over
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`the Ape DAO, Ape Foundation, and the Company anddirected and/or authorized,
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`6
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`CLASS ACTION COMPLAINT
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`directly or indirectly, the sale and/or solicitations of Yuga Financial Products to the
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`public. Ohanian’s SevenSevenSix was oneof several investors in Yuga during the
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`$450 million funding round.
`
`22. Defendant Amy Wu (“Wu”)is a resident and citizen of California, living
`
`in San Francisco, California. Wu served as a board memberof the Ape DAO,served
`
`as a consultant and spokesman for the Company, exercised control over the Ape
`
`DAO,Ape Foundation, and the Companyand directed and/or authorized, directly or
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`indirectly, the sale and/or solicitations of Yuga Financial Products to the public.
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`23. Defendant Maaria Bajwa (“Bajwa”)
`
`is a resident and citizen of
`
`California, living in Glendale, California. Bajwa served as a board memberof the
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`Ape DAO,servedas a consultant and spokesman for the Company, exercised control
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`over the Ape DAO, Ape Foundation, and the Company and directed and/or
`
`authorized, directly or indirectly, the sale and/or solicitations of Yuga Financial
`
`Products to the public.
`
`24. Defendant Dean Steinbeck (“Steinbeck”) is a resident and citizen of
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`California, living in Beverly Hills, California. Steinbeck served as a board member
`
`of the Ape DAO,served as a consultant and spokesman for the Company,exercised
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`control over the Ape DAO, Ape Foundation, and the Companyand directed and/or
`
`authorized, directly or indirectly, the sale and/or solicitations of Yuga Financial
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`Products to the public.
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`25. Defendant Guy Oseary (“Oseary’’)is a resident and citizen of California,
`
`living in Santa Monica, California. Oseary acted as a minority partner, consultant
`
`and spokesman for the Company,exercised control over the Company and directed
`
`and/or authorized, directly or indirectly,
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`the sale and/or solicitations of Yuga
`
`Financial Products to the public. Oseary’s Sound Ventures was one of several
`
`investors in Yuga during the Seed funding rounds.
`
`26. Defendant Mike “Beeple” Winkelmann (“Winkelmann”) is a resident
`
`and citizen of South Carolina,
`
`living in North Charleston, South Carolina.
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`7
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`CLASS ACTION COMPLAINT
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`Winkelmann acted as a promotor for the Company and solicited sales of Yuga
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`securities to the public.
`
`27. Defendant Madonna Louise Ciccone (“Ciccone”) is a resident and
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`citizen of California, living in Hidden Hills, California. Ciccone acted as a promotor
`
`for the Company andsolicited sales of Yuga securities to the public.
`
`28. Defendant Justin Bieber
`
`(“Bieber”)
`
`is a resident and citizen of
`
`California, living in Hidden Hills, California. Bieber acted as a promotor for the
`
`Companyandsolicited sales of Yuga securities to the public.
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`29. Defendant James “Jimmy”Fallon (“Fallon”) is a resident andcitizen of
`
`New York, living in New York, New York. Fallon acted as a promotor for the
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`Company,andsolicited sales of Yuga securities to the public.
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`30. Defendant Electric Hot Dog, Inc. “SEHD”f/k/a Holiday Road) is a New
`
`York corporation, with its headquarters located at 200 Park Avenue South, 8th Floor,
`
`New York, NY 10003. EHD is Defendant Fallon’s personal production company,as
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`well as being the production company for The Tonight Show (“Tonight Show’), of
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`which DefendantFallon is the host. EHD acted as a spokesman for the Company,
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`exercised control over Defendant Fallon and the content and disclosures of the
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`Tonight Show, and directed and/or authorized, directly or indirectly, the sale and/or
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`solicitations of Yuga securities to the public.
`
`31. Defendant Universal Television, LLC (“Universal”) is a New York
`
`corporation, with its headquarters located at 100 Universal City Plaza, UniversalCity,
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`CA 91608. Universal is the production company for the Tonight Show, of which
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`Defendant Fallon is the host. Universal acted as an indirect spokesman for the
`
`Company byvirtue of its exercise of control over both Defendant Fallon and the
`
`content and disclosures of the Tonight Show, and directed and/or authorized, directly
`
`or indirectly, the sale and/or solicitations of Yuga securities to the public.
`
`8
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`CLASS ACTION COMPLAINT
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`32. Defendant Paris Hilton (“Hilton”) is a resident and citizen of California,
`
`living in Malibu, California. Hulton acted as a promotor for the Company and
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`solicited sales of Yuga securities to the public.
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`33. Defendant Gwyneth Paltrow (‘Paltrow’) is a resident and citizen of
`
`California, living in Montecito, California. Paltrow acted as a promotor for the
`
`Company,andsolicited sales of Yuga securities to the public.
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`34. Defendant Serena Williams (“Williams”) is a resident and citizen of
`
`Florida, living in Jupiter, Florida. Williams acted as a promotor for the Company,
`
`and solicited sales of Yuga securities to the public.
`
`35. Defendant Austin Richard “Post Malone”Post (“Post”) is a resident and
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`citizen of Utah, living in Cottonwood Heights, Utah. Post acted as a promotor for
`
`the Company,andsolicited sales of Yuga securities to the public.
`
`36. Defendant Thomas “Diplo” Pentz (“Pentz’”) is a resident and citizen of
`
`California, living in Montecito, California. Pentz acted as a promotor for the
`
`Company,andsolicited sales of Yuga securities to the public.
`
`37. Defendant Calvin “Snoop Dogg” Broadus,Jr. (“Broadus”) is a resident
`
`and citizen of California, living in Diamond Bar, California. Broadus acted as a
`
`promotor for the Company,andsolicited sales of Yuga securities to the public.
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`38. Defendant Kevin Hart (“Hart”) is a resident and citizen of California,
`
`living in Calabasas, California. Hart acted as a promotor for the Company, and
`
`solicited sales of Yuga securities to the public.
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`39. Defendant AlexanderPall (‘Pall’) is a resident and citizen of California,
`
`living in Hollywood, California. Pall acted as a promotor for the Company, and
`
`solicited sales of Yuga securities to the public.
`
`40. Defendant Andrew Taggart (“Taggart’’) is a resident and citizen of
`
`California, living in Los Angeles, California. Taggart acted as a promotor for the
`
`Company,andsolicited sales of Yuga securities to the public.
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`9
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`CLASS ACTION COMPLAINT
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`41. Defendant Wardell Stephen Curry II (“Curry”) is a resident and citizen
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`of California, living in Atherton, California. Curry acted as a promotor for the
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`Company,andsolicited sales of Yuga securities to the public.
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`42. Defendant Nayvadius “Future” Wilburn Cash (“Wilburn Cash’) is a
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`resident and citizen of Georgia, living in Decatur, Georgia. Wilburn Cash as a
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`promotor for the Company,andsolicited sales of Yuga securities to the public.
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`43. Defendant Abel “The Weeknd” Tesfaye (“‘Tesfaye’’) is a resident and
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`citizen of California, living in Los Angeles, California. Tesfaye acted as a promotor
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`for the Company, and solicited sales of Yuga securities to the public.
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`44. Defendant Khaled Mohammed Khaled (“Khaled”) is a resident and
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`citizen of California, living in Los Angeles, California. Khaled acted as a promotor
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`for the Company, and solicited sales of Yuga securities to the public.
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`45. Defendant adidas America Inc.
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`is an Oregon corporation, with its
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`headquarters located at 5055 N Greeley Avenue, Portland, Oregon 97217. Adidas
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`AmericaInc. is the parent of adidas Ventures B.V., and acted as an agent and direct
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`or indirect spokesman for the Company by virtue of its capital investment in the
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`Company, and directed and/or authorized, directly or indirectly, the solicitations of
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`Yuga securities to the public. On March 29, 2010, adidas America Inc. registered
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`with the California Secretary of State to transact business within California.
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`46. Defendant adidas Ventures B.V.is a corporate venture capital firm with
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`its headquarters located at Hoogoorddreef 9 A, 1101BA, Amsterdam, Netherlands.
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`adidas Ventures B.V. operates as the investmentarm of adidas AmericaInc. and acted
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`as an agent and direct or indirect spokesman for the Companybyvirtueofits capital
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`investment in the Company,and directed and/or authorized, directly or indirectly, the
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`solicitations of Yuga securities to the public.
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`47. Defendants adidas America Inc and adidas Ventures B.V. are
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`collectively referred to as “Adidas.”
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`48. Defendant Ivan Soto-Wright (“Soto-Wright’”) is a resident and citizen of
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`Florida, living in Miami, Florida. Soto-Wright served as the CEO ofMoonPay during
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`the Relevant Period, and acted as a promotor for the Company,andsolicited sales of
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`Yuga securities to the public.
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`49. Defendant MoonPay USA LLC (“MoonPay”)
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`is
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`a Delaware
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`corporation, with its headquarters located at 1111 Brickell Avenue, 10th Floor,
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`Miami, Florida 33131. MoonPay acted as an agent and indirect spokesman for the
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`Company byvirtue of it being controlled, in part, by Defendant Oseary, directed
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`and/or authorized, directly or indirectly, the solicitations of Yuga securities to the
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`public. On April 30, 2021, MoonPayregistered with the California Secretary of State
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`to transact business within California.
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`Hl.
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`JURISDICTION AND VENUE
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`50.
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`This Court has subject-matter jurisdiction over this action pursuantto 28
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`U.S.C. §1332. Plaintiffs bring this civil action seeking to represent a class of more
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`than 100 plaintiffs pursuant to Federal Rule of Civil Procedure 23. Plaintiffs are
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`citizens of the State of California and the State of Florida.
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`17 of the 37 named
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`Defendants are citizens of California; all of the other Defendants reside outside of
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`California. Plaintiffs seek an award exceeding $5,000,000, exclusive of interest and
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`costs, on behalf of themselves and the putative Class.
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`51.
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`The Court has general jurisdiction over Defendants Ali, Wu, Bajwa,
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`Steinbeck, Oseary, Ciccone, Bieber, Hilton, Paltrow, Pentz, Broadus, Hart, Pall,
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`Taggart, Curry, Tesfaye, and Khaledas theyareall residents of the State of California
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`and are thus “at home” in the forum.
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`52.
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`This Court may exercise jurisdiction over Defendants because they have
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`continuous and systematic contacts with this District, do substantial business in this
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`State and within this District, and engage in unlawful practices in this District as
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`described in this Complaint, so as to subject themselves to personal jurisdiction in
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`this District, thus rendering the exercise of jurisdiction by this Court proper and
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`necessary.
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`53.
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`Venueis properin this judicial District pursuant to 28 U.S.C. §1391(b)
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`because Defendants live and/or conduct business in this District, and a substantial
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`part of the events or omissions giving rise to the claims alleged herein occurred in
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`this District.
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`IV.
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`FACTUAL ALLEGATIONS
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`54.
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`Cryptocurrency,or crypto, is a form of digital asset that exists virtually
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`and uses cryptography to secure transactions. Cryptocurrencies use a decentralized
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`system to record transactions and issue new units. The first cryptocurrency was
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`Bitcoin, which was founded in 2009. As of March 2022,
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`there are 18,465
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`cryptocurrencies in existence.°
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`55. Anyone can create a new cryptocurrency. An internet search will
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`provide you step-by-step instructions with video for creating a new cryptocurrency
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`in less than an hour. Once created,
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`the new cryptocurrency can be traded on
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`cryptocurrency exchanges.
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`Exchanges can be centralized such as Coinbase,
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`Crypto.com, Gemini, BitMart and others, or decentralized (Dex) such as Uniswap,
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`Pancake Swap, and others.
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`56.
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`Cryptocurrencyis stored in crypto “wallets”, which are physical devices
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`or online software used to store the private keys to the owner’s cryptocurrencies
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`securely. Wallets have unique identifiers called “Wallet IDs.” There is no limit on
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`the numberof wallets a person can control.
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`57.
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`Transactions of cryptocurrencies are recorded in a “blockchain,” which
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`serves as a distributed public ledger. The amountof cryptocurrency transacted, the
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`sender’s wallet address, the recipient’s wallet address and the date and time of the
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`Josh Howarth, How Many Cryptocurrencies are There In 2022?, EXPLODING
`°
`Topics (July 19, 2022), https://explodingtopics.com/blog/number-of-cryptocurrenc
`ies.
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`transfer for every transfer of cryptocurrency between digital wallets can be publicly
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`viewed
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`on
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`the
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`blockchain
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`by
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`using
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`any
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`number
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`of websites
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`like
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`www.blockchain.com/explorer or www.etherscan.io.
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`58.
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`The identity of an ownerofa particular wallet is not publicly available
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`from the blockchain. However, an owner can chooseto reveal themselves. Or, since
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`users usually have to reveal their identity in order to receive services or goods, many
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`times the owner of a wallet can be deduced from a wallet’s transactions or by
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`matching wallet data with other identifiable data points such as a user’s IP address.
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`59.
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`Like physical money, cryptocurrencies are fungible, meaning that they
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`can be traded or exchanged, one for another. For example, one bitcoin is always
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`equal in value to another bitcoin. Conversely, non-fungible tokens (“NFTs”) are
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`cryptographic assets with unique identification codes and metadata that distinguish
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`them from each other and cannot be replicated. Unlike regular cryptocurrencies,
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`NFTscannotbe traded or exchangedat equivalency. Instead, each NFT is assigned
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`its own value. Notably, a given NFT collection may set a floor price for each ofits
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`NFTs. This is the lowest “Buy Now”price for an NFT within that collection. For
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`example,if the floor price for an NFT collection is five ether, it means that the lowest
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`price someone can pay for an NFT that is not currently in an auctionis five of the
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`cryptocurrency token ether. Floor price is one of the key metrics investors consider
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`whenevaluating the intrinsic value for an NFT.
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`60.
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`Besides being traded and exchanged, a cryptocurrency may sometimes
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`also be used for governanceoverthe particular project or for someartificially created
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`purpose or use. For example, cryptocurrencies can be used as a form of in-game
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`virtual currency in an online video game. Cryptocurrencies can also be used as an
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`incentive for players who earn special tokensas part of the game that can be swapped
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`for other tokens or sold for cash.
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`61.
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`Similarly, a cryptocurrency can be usedasvirtual currency for purchases
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`madewithin the metaverse. The “metaverse”refers to a virtual-reality space in which
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`27
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`28
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`users can interact with a computer-generated virtual environment and other users.
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`Analysts predict that the metaverse has the potential to generate up to $5 trillion in
`value by 2030.°
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`A.
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`Yuga Labs Background
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`1.
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`The Founders
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`62. Yuga Labsis acryptocurrency-related NFT project founded in February
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`2021 by a group offour friends: Defendants Aronow,Solano, Atalay, and Ali, along
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`with Defendant Muniz.
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`63. Ali first met Atalay when they were at the University of Virginia, and
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`then both met Solano while studying computerscienceat the University of Maryland.
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`Solano was also friends with Aronow, sharing a mutual interest in literature and
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`online gaming.
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`64.
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`In February 2021, Solano contacted Aronow aboutstarting an NFT
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`project. During the early conception of the Bored Ape Yacht Club brand, Aronow
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`brought in Muniz to discuss both the creative and business side of the project.
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`According to an interview of both Solano and Aronow, they described the early
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`formation of Yuga as follows:
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`Despite his interest in digital collectibles, Solano did not buy his
`first NFT until early 2021. Shortly thereafter, in February, Solano
`texted Aronow to start an NFT project of their own. Aronow said: “We
`immediately started to conceive. One of the ideas was a public digital
`canvas, which