In an update to an ongoing class action lawsuit alleging crypto payments firm MoonPay conspired with Bored Ape Yacht Club creator Yuga Labs and several celebrities to inflate the value of NFTs, the complaint has been amended to include the account of a confidential witness.
Auction house Sotheby's was also added to the list of high-profile defendants.
According to the newly updated complaint filed last week, the lawsuit now cites a “confidential witness” it said worked in MoonPay’s compliance department. The witness alleges that after seeing “public reports that celebrities were being investigated and sued for unlawfully promoting the sale of crypto assets” they grew suspicious of MoonPay’s activities.
Later, when running a “targeted” search of MoonPay’s client database, the witness told the plaintiffs' lawyer that they attempted to locate celebrity client customer information that included names like Paris Hilton and Justin Bieber.
The witness — who claims that during 2022 they were one of handful of company compliance employees granted “heightened access to files and data associated with MoonPay customer financial transactions” — alleges they failed to find any information on celebrity clients, including basic profile information, compliance data or any transaction history, according to the complaint.
In an effort to bolster the strength of the witness’ account, the lawsuit also now states that the supposed whistleblower's professional duties included performing “Enhanced Due Diligence, Know Your Customer and Anti-money Laundering checks on MoonPay customers.”
In June, The Block reported that MoonPay had gifted the celebrities the valuable Bored Apes NFTs in order to promote its business.
MoonPay did not immediately respond to a request for comment.
The class action grabbed headlines when first filed in late 2022 as it alleged a host of celebrities had promoted Bored Apes and MoonPay on social media and television without disclosing either their financial interests in the companies or if they had received compensation.
Filed in the U.S. District Court in California, besides naming Bieber and Hilton, the class action also named Madonna, Jimmy Fallon, Kevin Hart and star athletes Serena Williams and Stephen Curry as taking part in the promotional scheme.
The lawsuit was also updated to add Sotheby’s to the list of defendants, alleging the auction house's representatives misled people by stating that a “traditional" art collector had purchased 101 Bored Apes for $24.4 million when in fact defunct crypto exchange FTX bought the NFTs.
“Sotheby’s representations that the undisclosed buyer was a 'traditional' collector had misleadingly created the impression that the market for BAYC NFTs had crossed over to a mainstream audience,” according to the lawsuit.
In a statement the auction house said "the allegations in this suit are baseless, and Sotheby's is prepared to vigorously defend itself."
The auction house has been considerably active in finding buyers for high-priced digital artworks, including the auction of NFTs which once belonged to failed hedge fund Three Arrows Capital.
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