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A federal judge in the United States has dismissed a prominent investor lawsuit that alleged Yuga Labs was selling unregistered securities via Bored Ape Yacht Club (BAYC) NFTs and ApeCoin.
The ruling, delivered by Judge Fernando M. Olguin, determined that the plaintiffs did not satisfy the legal criteria for an investment contract.
Reportedly, the lawsuit originated in 2022 and sought to compel a legal determination that the tokens qualified as securities; the court disagreed and dismissed the lawsuit.
Judge Concluded Howey Test Unfulfilled
Judge Olguin concluded that the plaintiffs did not demonstrate that all three elements of the Howey Test were met. According to reports, the court stated that purchasers were not proven to have a shared enterprise linked to Yuga’s efforts, nor were they assured returns stemming mainly from Yuga’s endeavors.
The judge highlighted that numerous BAYC transactions were presented as collectibles and membership privileges rather than investment agreements.
Source: US District Court Central District of California.
Plaintiffs Claimed Profit Anticipations
The investors contended that market discussions regarding trading and unique characteristics fostered profit expectations. However, the court deemed those assertions to be insufficient to transform a collectible into a security.
The judgment indicated that purchasers’ fortunes were not contingent directly on Yuga’s future commercial activities as required by securities legislation. This narrower perspective left the complaint without the essential legal foundation.
Regulators Remain Vigilant
Reports indicate that the SEC has initiated enforcement actions in other NFT cases, signifying that the sector continues to be under close regulatory scrutiny.
Actions recorded by regulators included instances linked to projects that offered revenue sharing or made promotional payments. Courts have not consistently delivered a uniform interpretation of their conclusions.
This ambiguity suggests that creators and platforms may encounter legal risks, even post-ruling.
Not A Total Defense For NFTs
Legal specialists warned that the ruling does not convey that all NFTs are exempt from securities allegations.
Yuga Labs itself has confronted other legal challenges; in July 2025, an appellate court annulled an $8.8 million verdict that Yuga had secured in a trademark dispute and remanded that issue for retrial. The varied outcomes in related litigations indicate that courts are evaluating each case on its specific circumstances.
The ruling is anticipated to provide some comfort to NFT holders and marketplaces, as one significant challenge has been dismissed.
Nonetheless, projects that guarantee revenue sharing, profit distributions, or are predominantly marketed as investments could yield a different verdict if contested. The ruling is beneficial, but it is not an all-encompassing safe haven.
Featured image from Dall-E, chart from TradingView
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