Paris Hilton and Jimmy Fallon are being sued for promoting NFTs
A proposed class action suit alleges that their enthusiasm for NFTs was bought and paid for, without any disclosure.
Remember at the beginning of this year when Paris Hilton and Jimmy Fallon made us all suffer through an asinine 77-second bit about their Bored Ape NFTs? (And yes, believe it or not, that was this year.) It was awkward and awful, although it did inspire some great reactions on social media, including one that predicted "if anyone can kill NFT culture, it's Jimmy Fallon and Paris Hilton."
Now, as 2022 draws to a close, that prediction may be close to coming true, indirectly at least. Fallon, Hilton, and others who have used their celebrity to promote NFTs are facing a proposed class action lawsuit accusing them of fraud. The list of defendants in the suit, available via The Hollywood Reporter, is lengthy to say the least: It also includes Reddit co-founder Alexis Ohanian, Madonna, Justin Bieber, Gwyneth Paltrow, Serena Williams, Post Malone, Snoop Dogg, Kevin Hart, Steph Curry, DJ Khaled, Adidas, a pile of other people who names I don't recognize, and of course Yuga Labs, the parent company of the Bored Ape Yacht Club.
"The Company presents the Bored Ape ecosystem as a brand that is organically beloved by some of the most famous celebrities in the world," the lawsuit states. "But the truth is that the Company’s entire business model relies on using insidious marketing and promotional activities from A-list celebrities that are highly compensated (without disclosing such), to increase demand of the Yuga securities by convincing potential retail investors that the price of these digital assets would appreciate and that, as members of 'the club,' these investors would be given exclusive access to additional financial products and benefits."
The lawsuit alleges that all of the Bored Apes action over the past year was in fact "a vast scheme" between Yuga Labs, "a highly-connected Hollywood talent agent" named Guy Oseary, and MoonPay, a company that "purports to be a white-glove service designed to help the super-rich and celebrities buy NFTs" but is in fact, according to the lawsuit, "a covert way to compensate the promoter defendants" without disclosing it to investors.
Naturally, the scheme worked: The endorsements increased both the interest in and the price of Bored Ape NFTs, the suit claims, "causing investors to purchase these losing investments at drastically inflated prices."
Much of the suit actually turns on MoonPay, the NFT acquisition service, which numerous defendants had previously invested in. For instance, the lawsuit notes a segment that took place in a November 2021 episode of The Tonight Show, in which Fallon—the host—announced that he had purchased his first NFT through MoonPay during an interview with NFT artist Mike "Beeple" Winkelmann. The suit alleges that Fallon and Winkelmann were in fact "recruited and paid" to promote MoonPay and Bored Apes during the show; it also says that Winkelmann is "direct business partners" with Oseary, the high-powered talent agent, at another NFT company.
"Fallon did not disclose that he had a financial interest in MoonPay or that he was likewise financially interested, directly or indirectly, in the increased sale and popularity of Yuga securities," the suit claims. "Nor did EHD [Electric Hot Dog, Fallon's production company] or Universal disclose that this purportedly organic segment on the Tonight Show was in reality a paid advertisement for the BAYC collection of NFTs and MoonPay by two celebrities (Fallon and Winkelmann) who are business partners with an investor (Oseary) in both Yuga and MoonPay."
Similar allegations are made regarding Fallon's infamous interview with Paris Hilton: "Hilton and MoonPay purposefully did not disclose Hilton’s direct financial interest in MoonPay and, relatedly, the increased sale of Yuga securities through MoonPay," the suit states. "And again, there was no disclosure from any of the Tonight Show’s production companies, namely Defendants Universal or EHD, regarding Hilton’s and/or Fallon’s financial interests in MoonPay or compensation for promoting the BAYC NFTs."
The suit makes various allegations against the other defendants: For instance, it states that Gwyneth Paltrow announced that she had "joined" the Bored Apes Yacht Club in January 2022 and thanked MoonPay for its services, without disclosing that she was an investor in MoonPay and thus "had a vested interest in sales of Yuga securities." Bieber and Madonna were both allegedly given expensive NFTs in exchange for promoting Yuga and/or MoonPay. There are also purported links to the FTX cryptocurrency exchange, which failed spectacularly in November.
Yuga Labs denied the claims in a statement sent to The Hollywood Reporter. "In our view, these claims are opportunistic and parasitic," a spokesperson told the site. "We strongly believe that they are without merit, and look forward to proving as much."
A few years ago, in response to a CS:GO influencer gambling scandal, funny enough, the FTC published updated disclosure guidelines for influencers that laid things out in pretty simple terms, like "If a brand pays you or gives you free stuff, tell people about that relationship." In that light, this might seem like a fairly open-and-shut case, if lawyers can prove that some form of payment, direct or indirect, was made in exchange for the promotions. There's a long way to go before this lawsuit adds up to anything, though, and no guarantee that it will at all: At this point, the law firm spearheading the case is seeking approval to pursue the matter as a class action.