TL;DR
- A federal judge dismissed the lawsuit against Yuga Labs and ruled that BAYC NFTs do not qualify as securities under U.S. law.
- The court concluded that the NFTs were promoted as collectibles with membership benefits, not as investments designed to generate profits.
- The ruling sets a precedent for Web3, providing legal clarity that will allow NFT projects and communities to develop initiatives with greater confidence.
A federal judge in the United States dismissed the lawsuit against Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) NFT collection, ruling that these tokens do not qualify as securities under U.S. law. This decision establishes a crucial precedent for the Web3 ecosystem and will offer greater legal clarity for NFT projects in the future.
Yuga Labs Establishes a Crucial Precedent for the NFT Market
The ruling, issued by Judge Fernando M. Olguin, stated that the NFTs were marketed as digital collectibles with membership benefits, not as investments intended to generate financial returns. Plaintiffs had claimed in 2022 that Yuga Labs had misled buyers into expecting profits, but the court concluded that statements about potential future value or initiatives did not constitute promises of financial gain.
The judge also determined that no “common enterprise” existed between Yuga Labs and the buyers, a key element of the Howey Test, the legal standard used by the SEC to determine whether an asset qualifies as a security. BAYC NFTs were publicly tradable on the blockchain and did not involve ongoing financial arrangements with the company. For these reasons, the jury trial scheduled for October was canceled, and all claims were dismissed with prejudice, permanently closing the case.
A New Framework for Emerging Projects
The ruling is expected to be pivotal in establishing a clearer framework for NFT project development, reducing the regulatory uncertainty that has historically affected the industry. Ecosystems such as Shiba Inu, as well as developers and communities, will be able to advance their initiatives with greater legal security.
The decision also sets an important precedent for Web3 projects more broadly, confirming that NFTs marketed as collectibles or assets with community-oriented utilities can generally remain outside the scope of securities laws. Legal clarity will allow initiatives to focus on delivering new experiences and expanded functionalities within their ecosystems.
Yuga Labs has secured legal backing that could reshape the perception of NFTs as digital assets with cultural and community value, rather than traditional financial investments, potentially acting as a strong catalyst for market activity
