An art gallery is seeking the dismissal of a class-action lawsuit brought by holders of non-fungible tokens (NFTs), asserting that it bears no responsibility for the alleged depreciation in the value of these digital assets amid a broader market decline. In a motion filed in a New York federal court, the Eden Gallery Group articulated that the downturn in NFT values does not constitute evidence of fraud or dishonesty in relation to its own collection.
The lawsuit involves a group of 36 individuals who purchased NFTs from the “Meta Eagle Club” collection. They claim to have been misled, alleging fraud, unjust enrichment, and violations of state business regulations. The plaintiffs referred to the project as a “rug pull,” pointing to the collection’s sale of 12,000 distinctive human-like eagle NFTs, which reportedly generated $13 million from February 2022 to November 2023.
Eden Gallery noted that while the Meta Eagle Club NFTs enjoyed significant popularity at their launch in early 2022, the general trend in the NFT market has since experienced a decline. The current floor price for a Meta Eagle Club NFT is approximately 0.0051 ETH, equating to around $17, a steep drop from 0.6 ETH, or roughly $1,800, at the time of launch. This dramatic decrease underscores the volatility of the NFT market.
The plaintiffs assert that they overpaid for their NFTs based on misleading statements from the gallery and are seeking compensatory damages ranging from $1,224 to $70,219 for each claimant. However, Eden Gallery contends that the individual claims do not meet the necessary jurisdictional threshold of $75,000 and argues against the collective grouping of claims.
Despite a recent increase in NFT sales linked to a bullish trend in the cryptocurrency market, industry data indicates that NFT sales volumes remain significantly lower — down 98% from their peak levels in early 2022. The ongoing downturn raises questions about the sustainability of the NFT market amidst fluctuating investor sentiment.
