Bored Ape NFTs Are Not Securities Court Rules in Landmark Decision

A federal judge in California has tossed out a class-action lawsuit against Yuga Labs, creator of the once-dominant Bored Ape Yacht Club NFT collection, ruling that the digital collectibles cannot be considered securities.  The Los Angeles-based judge, Fernando M. Olguin—who was appointed to the bench in 2013 by former president Barack Obama—ruled Thursday that Bored Ape NFTs fail to meet several criteria of the test used to determine the security status of financial transactions.Bored Ape NFTsBored Ape NFTs fail to trigger the necessary “common enterprise” prong of the test used by courts to determine whether an asset is a security, Olguin determined.“In sum, plaintiffs have not alleged the type of ‘interplay’ between the alleged securities and proprietary ‘ecosystem’ that underpinned the logic of Dapper Labs and DraftKings, and therefore have not adequately alleged horizontal commonality,” he wrote. The judge further found that Yuga Labs’ collection of a The court’s logic contrasts sharply with legal arguments made by the SEC during the Biden administration—particularly that creator royalties For years, Yuga Labs has been at the front lines of a Earlier this year, Yuga Labs announced the SEC had It’s one thing for the SEC to decline to pursue certain cases against NFT projects though, and another for a federal court to definitively rule on the matter, as it did in Yuga’s case this week. Despite the significance of the ruling, Bored Ape NFTs seem largely unaffected. The collection’s floor price—the price of the cheapest available NFT in a collection—is down 2% in the last 24 hours, to Representatives for Yuga did not immediately respond to Decrypt’s request for comment on this story.