Federal Court Dismisses Investor Lawsuit Against Yuga Labs Over Bored Ape NFTs

Highlights:

• A court has dismissed an investor lawsuit on the securities criteria.
• The judge ruled that Bored Ape NFTs are not securities, as Yuga Labs marketed them as digital collectibles with perks.
• The ruling supports a wider trend where digital assets like stablecoins and LUNA are seen as non-securities globally.

A U.S. federal judge has dismissed an investor lawsuit against Web3 company Yuga Labs, the creator of the Bored Ape Yacht Club NFT collection. Judge Fernando M. Olguin ruled that the company’s NFTs do not meet the legal definition of securities under U.S. law. The court concluded that the plaintiffs could not prove that NFTs sold by Yuga met the requirements of the Howey test, which identifies whether an asset is an investment contract.

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🚨 JUST IN: A U.S. FEDERAL JUDGE IN CALIFORNIA HAS DISMISSED AN INVESTOR LAWSUIT AGAINST YUGA LABS, RULING THAT BORED APE YACHT CLUB (BAYC) NFTS AND APECOIN ARE NOT SECURITIES. THE COURT HELD THAT THE PLAINTIFFS FAILED TO SATISFY THE HOWEY TEST, AFFIRMING THAT BAYC NFTS ARE… pic.twitter.com/te5TTHVRB6

— Coinwaft (@coinwaft) October 4, 2025

The decision stressed that Yuga Labs sold its NFTs as online collectibles that provide access to exclusive events and online communities. According to Judge Olguin, such benefits are consumptive, rather than investment-related. He wrote that promising future benefits does not make an NFT a financial product. “The fact that defendants promised that NFTs would confer future, as opposed to immediate, consumptive benefits does not alone transmute those benefits from consumptive to investment-like in nature,” he said.

The judge further stated that the plaintiffs failed to demonstrate that the NFTs constituted a common enterprise or that the buyers were anticipating profits on the actions of Yuga. Rather, he discovered that the NFTs operated autonomously in public blockchain systems without continuous connections to Yuga Labs. The ruling lends legal support to the perception that much of NFTs is a digital collectible, not an investment.

Court Dismisses Investor Lawsuit Against Yuga Labs

Judge Olguin’s decision also compared the case to earlier rulings involving Dapper Labs and DraftKings NFTs. In those cases, the courts found that the NFTs operated within a controlled ecosystem, linking investors’ success to the issuer’s business. However, the court said Yuga Labs’ situation was different. Buyers purchased Bored Ape NFTs through third-party marketplaces such as OpenSea and Coinbase, not directly from Yuga Labs.

The judge determined that this separation meant no shared financial dependency existed between the buyers and the company. He added that Yuga Labs’ collection of creator royalties did not tie the investors’ profits to the company’s fortunes. According to the ruling, the firm earned revenue from transaction fees regardless of whether NFT holders gained or lost money.

The court’s reasoning aligns with other recent decisions in the United States. In April, the Securities and Exchange Commission clarified that certain stablecoins would not be classified as securities. According to the agency, these digital assets do not work in the same way as traditional investment products and are not subject to transaction reporting requirements.

The SEC has determined that fully-reserved, liquid, dollar-backed stablecoins are not securities. Therefore blockchain transactions to mint or redeem them do not need to be registered under the Securities Act. Helpful clarity from @SECGov. pic.twitter.com/oUsq0snLaF

— David Sacks (@davidsacks47) April 4, 2025

Implications for the NFT Industry

This decision has extensive implications for NFT issuers and investors all over the globe. It reinforces the fact that not every digital asset qualifies as a security, based on its marketplace and sale. Other regions have shown similar interpretations. The Supreme Court of South Korea has recently passed a ruling that LUNA and UST tokens are not securities under the Capital Markets Act in South Korea. Chief Justice Oh Seok-jun said that the tokens failed to comply with the legal requirements of financial investment products.

These uniform rulings in key markets may influence the future treatment of digital assets. In the case of Yuga Labs, the decision comes after the SEC closed an investigation into the company at the beginning of this year. Its flagship NFT project, Bored Ape Yacht Club, has already registered over $7.2 billion in trading volume since its debut in 2021.

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