Eden Gallery has moved to dismiss a class-action lawsuit filed by a group of non-fungible token (NFT) holders, arguing that losses in NFT prices were the result of broader market conditions rather than any fraudulent activity. In a January 7 filing in a New York federal court, the art gallery stated that the decline in NFT values, including its “Meta Eagle Club” collection, was part of a market-wide downturn that does not constitute fraud or misrepresentation.
Market Decline, Not Misrepresentation, Says Eden Gallery
“Plaintiffs may have buyers’ remorse,” the gallery noted in its motion, “but their losses, if any, are due to market forces.” Eden Gallery emphasized that NFTs were marketed as digital art products, not investment vehicles, and rejected claims of deceptive practices.
The October-filed lawsuit, brought by 36 Meta Eagle Club NFT holders, accuses Eden Gallery and the collection’s creator, Gal Yosef, of fraud, unjust enrichment, and violating New York’s General Business Law. The plaintiffs allege that the project, which raised $13 million between February 2022 and November 2023, was a “rug pull” — a term for projects that fail to deliver on promises after profiting from initial sales.
Lawsuit Highlights Buyer Losses
The Meta Eagle Club NFT collection featured 12,000 unique humanlike eagle designs but has seen its floor price collapse since launch. According to OpenSea, the current floor price for the collection is 0.0051 ETH (approximately $17), a steep decline from its initial price of 0.6 ETH (roughly $1,800).
Plaintiffs claim they overpaid for the NFTs due to alleged misrepresentations, seeking compensatory damages ranging from $1,224 to $70,219 per claimant. However, Eden Gallery argued in its motion that none of the individual claims meet the jurisdictional threshold of $75,000, and aggregation of claims is not allowed.
Despite recent optimism in the NFT market fueled by a cryptocurrency bull run, the sector remains far from its peak. Industry analytics from CryptoSlam indicate that NFT sales volumes are still down 98% from their highs in early 2022, highlighting the challenges faced by both creators and collectors.
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