We got on the horn with Benedict Evans, A tech thinker who partnered at Mosaic Ventures and Andreessen Horowitz, who led the $450 million fundraising round for Yuga Labs — before the crypto winter. We wanted an outside read on the state of the art world’s soul, following its brief embrace of the crypto phenomenon. If an art dealer gets in and out unscathed, how bad must they feel?
“Does a real estate agent feel any obligation to tell you that you’re in a real estate bubble, and you shouldn’t buy?” Evans said. “None. It’s not their job. Their obligation is still to the seller.”
For more insight into how the sky-high prices of certain NFTs were built up, there is an explosive lawsuit filed by the US District Court in the Western Division of the Central District of California against the founders of Bored Ape and their most famous fans. The 95-page complaint reads like an episode of Consequence set in the middle of the crypto-crazy early 20s, with a Mad Libs grab bag of rappers, zeitgeist hitters and A-listers: Diplo, The Weeknd, Gwyneth Paltrow, Snoop Dogg, Post Malone, Future, Kevin Hart, and—last but not least—The Chainsmokers. The suit, which seeks class-action status for buyers of Apes or ApeCoin, weaves a tale of alleged crypto fraud, Hollywood machismo, social media spam, celebrity worship and a bit of Bono. Ultimately, it claims that the rise of Planet of the Bored Apes was nothing more than a scheme to make the apes look like assets that celebrities and art dealers spent millions to acquire. Those deals were staged, the suit alleges: The famous and influential got their monkeys for free and were paid to promote the stuff, a fact they didn’t disclose.
“These famous celebrities, they come in, and they’re going to cause an increase in price as they continue to interact in the ecosystem. They’re part of the club, and more people are going to want to be part of the club with the celebrities to have it,” says lawyer John Jasnoch, a partner at the San Diego firm Scott+Scott, which filed the suit on behalf of a pair of aggrieved Bored Ape and ApeCoin owners called Adonis Real and Adam Titcher, as well as other claimants yet to be named. “And so, ‘Oh, they’re unique and they’re rare’—that drives the thought that this will be a successful investment for you.”
You may have noticed in early 2022 that almost every celeb was on a crypto company’s payroll – Stephen Curry made bank as the spokesperson for FTX and several celebrities posted Instagram stories about their expensive NFTs. And there it was Larry David Super Bowl commercial. According to the suit, the alleged scheme began when Yuga Labs partnered with the music industry veteran Guy Oseary, who drives Madonna and U2. Named as a defendant in the suit, Oseary brought in high-profile friends and clients to buy and promote their NFTs.
But what the lawsuit alleges is that Oseary and the company used a consumer crypto app called MoonPay — think Venmo or PayPal but for crypto — to make the “transactions” happen without money changing hands, so the bolded names never had to actually spend money on the NFTs they said they were buying. In addition, the suit alleges that Oseary’s venture capital firm Sound Ventures (of which Ashton Kutcher, who is not named as a defendant in the suit, is a partner), along with several of the other well-known Ape underwriters named elsewhere in the lawsuit, were early investors in MoonPay, enabling them to “benefiting financially from the cross-pollination and promotion”. efforts for the Yuga Financial Products.”
“Together, Oseary, the MoonPay Defendants and the Promoter Defendants each shared the strong motive to use their influence to artificially create demand for the Yuga Securities, which in turn would increase the use of MoonPay’s crypto-payment service to handle this new demand,” the suit read. “At the same time, Oseary may also be using MoonPay to disguise how he paid off his celebrity cohorts for their direct or off-label promotions of the Yuga Financial Products.”
Asked for comment, a Yuga Labs spokesperson said: “In our view, these claims are opportunistic and parasitic. We strongly believe they are without merit, and look forward to proving as much.” Oseary did not respond to requests for comment last week, and the court filing shows he was granted a delay in responding to the case.
While the lawsuit is in its earliest stages, it may already have some much-needed context for one of the more baffling exchanges of our entire pandemic-era screen consumption: the “I bought a monkey” back-and-forth between Jimmy Fallon and Paris Hilton on The Tonight Show in January 2022, in which the pair, Ape owners each, discussed the finer parts of NFT shopping. Fallon, in the somber tone of a man who has come to terms with the state of his soul, says he chose his Breton-striped Monkey because he also likes striped shirts. Hilton, as if she didn’t have the faintest idea what she was saying, offered, “I saw you on the show with Beeple and you said you had it on MoonPay.” As the suit claims, the exchange helped build the idea of Bored Apes as investment pieces worth millions — a Tinker Bell game of sorts — and attract more buyers, for all its unintentional comic gold. As the plaintiffs and their lawyers tell it, celebrities who talk about their Apes on social media, or late night TV, became public part of a scheme in which their hundreds of thousands of dollars worth of NFTs translated into the popularity of ApeCoin. Which translates to a $450 million seed fundraise, and a $4 billion valuation.
Neither Fallon nor Hilton responded to requests for comment last week.
“Do you have the DJ Khaled one?” Jasnoch, the lawyer, asked me.
He referenced footage of DJ Khaled, hip-hop’s walking exclamation point from the era, standing on a yacht looking at various phone screens while various people tell him, “You bought a monkey! You got ‘ bought a monkey!” while Khaled shakes around in confusion.
“Yeah, it’s pretty bad,” Jasnoch said. “He’s just like, ‘I don’t know what it is.'”
In the auction world, selling the digital future was a relatively subtle proposition: The houses had to accept the cultural cognoscenti and implant the idea that NFTs were art. Was Beeple’s Every Days-a series of tens of thousands of images and illustrations, some of which are sexist or just plain childish – real fine art worthy of a downtown gallery opening and a celebratory private dinner at Frenchette, which Beeple really did last March for threw him? In retrospect, it’s a bit crazy to say things like “I look at life as pre-Beeple and post-Beeple – as the world thinks of before Jesus Christ and after,” like Noah Davis, who organized the $69 million Beeple sale at Christie’s as the house’s head of digital really once said. (Davis has since left Christie’s and now, as it happens, works as a brand chief at Yuga Labs for CryptoPunks, another one of his NFT offerings. They kind of look like the Apes, if they were comic book guys with a punk appearance was.)
But it doesn’t quite matter if it’s art—auction houses sell wine and constitutions and sneakers and watches and first editions. If it sells, you sell it.
“It’s like Hollywood making movies about how Hollywood sucks. You actually embrace it,” said Evans, our crypto sherpa. “Like, yeah, I’ll take that money.”
The auction houses have their boilerplate explanations of why a certain NFT should be contextualized as art, making sure to remain as committed as ever to the seller, not the buyer. Did Beeple really “achieve something historic” when Christie’s ditched his NFT-cum-walking-man sculpture, human one, in his evening sale between paintings Issy Wood and Stanley Whitney?
Jasnoch, the plaintiffs’ attorney in the Yuga case, attempted to thread this needle by comparing the Bored Ape NFTs and their crypto-complement, ApeCoin. The former can be argued as a work of art in the broadest sense. The latter is simply a currency with no artistic value whatsoever – which, in his estimation, makes it a viable thing to be regulated. Connecting the two entities so closely is where things get tricky – and the lawyers get involved.
“I think the concept of an NFT can have intrinsic value, and that a token can represent value in some way, and I think there’s value in people liking the look of the artwork,” he said. “But in terms of it being a financial product and how it’s marketed and how it’s sold, it really is an unregistered security and it should be subject to proper disclosure. And once you start generating all that hype around the Bored Ape itself, they release the ApeCoin token, which doesn’t even have the pretense of an artwork or anything. And it’s just a straight unregistered security used for speculation and for trading.”
Evans offered another conundrum. When a market offers something for sale at a large amount, there is an understanding among the public at a base level that it has some legitimate interest. Maybe the artwork isn’t up to par, but it has provenance and the artist is in museum collections – or there’s historical relevance to something that makes it at least a curiosity.
“When you buy vintage vinyl, or rare sneakers, or Marilyn Monroe’s shoes, or a Salvador Dalí print, or whatever it is, you’re getting something that has no tangible physical value, but cultural value,” Evans said. said. “There’s like a deep cultural base that thinks Jordan sneakers are worth something, early Sex Pistols vinyl is worth something. And the challenge with all these NFTs was that you didn’t really know that there was that broad, deep cultural base. It was just, ‘Oh my god, someone just bought one for 200,000.’
For now, some in the art world still act as if the dedication to NFTs might produce some kind of windfall. Sotheby’s Metaverse is having a sale right now. It presents the first NFTs by the artist Sebastião Salgado, but they don’t exactly set the place on fire. They cost $250 each. Back in 2021, Sotheby’s Natively Digital sale netted $17 million, with $11 million paid for a single NFT from the CryptoPunks series.
But in February 2022, Sotheby’s set up a special sale where it expected a set of 104 CryptoPunks to go for as much as $30 million, only to see the thing collapse minutes before the hammer when the consignor backed out, allegedly due to a lack of interest from bidders. By last December, the Natively Digital sale seemed to have completely lost its luster. Sotheby’s offered the first-ever Keith Haring NFT as the star lot of the sale, but it sold for $25,000, well below the $80,000 high estimate.