A group of NFT holders sued the creators, claiming they took no significant steps to fulfill promised perks and had no knowledge of blockchain.
A group of 36 non-fungible token (NFT) holders have sued an art gallery and artist who made their NFTs, claiming they failed to follow through on a metaverse-based private club and other promised perks.
In an Oct. 9 complaint filed in a New York federal court, the group claimed Eden Gallery and artist Gal Yosefâs project âwas a ârug pullââscam.
TheNFTcollection, the Meta Eagle Club, sold 12,000 unique humanlike eagles and collected $13 million between February 2022 through November 2023.
But the group alleged nothing âsubstantialâ was ever done to âactually build the Meta Eagle Club in any real way,â despite updates from the team behind the project claiming otherwise.
Source:Meta Eagle Club- GalyVerse
The lawsuit also alleged that the people building the project had no âexperience or expertise related to blockchain and smart contract development and engineering, and in fact, did not have any experience related to software development or engineering at all.â
NFT holders were promised entry into a Meta Eagle Club and a range of perks.
The Meta Eagle Clubâsroadmapadvertised that NFT holders could enter raffles to win entry to Eden Gallery events, hot air balloon rides, private jets, helicopters, exclusive collectible artworks and more.
The group claimed only âa handful of tickets to the experiences promoted extensively in their statementsâ were provided, along with two Galyverse events and 11 physical artworks signed by Gal Yosef.
The complaint said on Jan. 12, 2023, a successful vote was held on Eden Galleryâs Discord to reallocate the budget of the remaining items from the Roadmap into âalternative utilities,â including keeping a marketplace active. The shift in priorities was blamed on the market downturn.
The group claimed the gallery and Yosef pledged to create more art to populate an online world called the Galyverse, which they alleged would see membersâ investments in the club âincrease, and they would receive dividend-like digital assets as long as they were members.â
Perks promised for tokenholders in the Meta Eagle Club. Source: Galyverse
They claimed this motivated investors to buy the Eagle NFTs based on âmaterially false information and suffer losses because the Meta Eagle Club NFTs had no value,â as the promises âassociated with creating their valueâ were never fully fulfilled.
âAs a result, Plaintiffs paid substantially more for the NFTs than they were actually worth,â the group claimed.
Eden Gallery and artist Yosef are accused of common law fraud, unjust enrichment and violating New York General Business Law.
The group is seeking damages to be decided by the court, injunctive relief and attorneyâs fees.
Eden Gallery and Yosef didnât immediately respond to a request for comment.
This isnât the first lawsuit to be launched amid NFT buyer remorse.
In a Sept. 19 suit,two OpenSea users proposed a class actionagainst the NFT marketplace, claiming it sold unregistered securities contracts after OpenSea received aWells noticefrom the Securities and Exchange Commission.
In May, adisgruntled customer filed a class-action lawsuitagainst Italian fashion brand Dolce & Gabbana and digital assets platform UNXD for alleged delays in delivering NFT products that caused the assets to lose most of their value.
The broader NFT market is still struggling toregain ground and the highsof previous years, with an Aug. 20reportby NFT Evening analysts suggesting 96% of about 5,000 NFTcollections they examined were deadin 2024.
https://cointelegraph.com/news/nft-holders-sue-art-gallery-broken-metaverse-promise