NFT Holders File Lawsuit Against Art Gallery Over Broken Metaverse Promises
A group of NFT holders is suing Eden Gallery and artist Gal Yosef, alleging that promises tied to their NFT project, the Meta Eagle Club, were never fulfilled. This lawsuit highlights increasing frustrations among NFT buyers as the digital asset market faces ongoing challenges.
Allegations of a ‘Rug Pull’ in NFT Project
In a complaint filed on October 9 in a New York federal court, 36 NFT holders accused Eden Gallery and Yosef of orchestrating a “rug pull” scam. The plaintiffs allege that despite raising $13 million from the sale of 12,000 Meta Eagle Club NFTs between February 2022 and November 2023, the gallery and artist took no meaningful steps to develop the promised metaverse-based private club and its associated perks.
The Meta Eagle Club collection featured human-like eagle characters, with the roadmap promising a range of exclusive benefits, including access to special events and luxury experiences. However, the lawsuit claims that the project’s team had no experience with blockchain or smart contract technology, casting doubt on their ability to deliver on these promises.
Broken Promises and Limited Perks for NFT Holders
The lawsuit outlines a long list of perks that were promised to Meta Eagle Club NFT holders, such as raffles for luxury experiences including hot air balloon rides, private jet access, and collectible artwork. However, the plaintiffs claim that only a small fraction of these promises were kept. The group says that out of the many events and rewards advertised, only two events and 11 physical artworks were delivered.
In January 2023, Eden Gallery’s Discord community voted to redirect funds from the original roadmap to focus on “alternative utilities,” citing a market downturn as the reason for the shift in priorities. This decision, the plaintiffs argue, left many of the originally promised perks unfulfilled.
Investors Allegedly Misled by False Claims
According to the lawsuit, Eden Gallery and Yosef misled investors into purchasing the Meta Eagle Club NFTs by making false claims about the project’s potential and future returns. The plaintiffs argue that they were led to believe that their investments would increase in value and that they would receive digital assets akin to dividends. Instead, they claim the NFTs became worthless, leaving them with significant financial losses.
The plaintiffs are seeking damages for common law fraud, unjust enrichment, and violations of New York General Business Law. They also request injunctive relief and coverage of attorney’s fees. Eden Gallery and Yosef have yet to respond to the lawsuit.
Legal Action Highlights Growing Discontent in the NFT Market
This lawsuit is not the first instance of disillusioned NFT buyers seeking legal recourse. In September, two OpenSea users filed a class-action suit against the marketplace, accusing it of selling unregistered securities contracts. Earlier this year, fashion brand Dolce & Gabbana and digital assets platform UNXD faced a similar lawsuit over delays in delivering NFT products.
As the NFT market continues to struggle, reports suggest that most collections have lost value. A study by NFT Evening in August 2024 found that 96% of approximately 5,000 NFT collections examined were deemed “dead.” This widespread market downturn has left many investors questioning the long-term viability of their digital assets.
The Future of NFTs: Buyer Beware
The lawsuit against Eden Gallery and Gal Yosef serves as a cautionary tale for NFT investors. As the market remains volatile, potential buyers are advised to carefully vet projects and assess the experience of the teams behind them. With the broader NFT market showing signs of decline, more lawsuits could emerge as investors seek to recover losses from failed promises.
