Yuga Labs lawsuit dismissed: a US federal judge found Bored Ape Yacht Club NFTs, ApeCoin and other Yuga-issued tokens do not meet the Howey Test’s three prongs and therefore are not securities, ruling purchasers bought consumable digital collectibles rather than investment contracts. Judge ruled NFTs were consumable collectibles, not investment contracts Judge Fernando M. Olguin found no common enterprise or explicit profit promise tied to Yuga’s NFT sales. Court cited precedent that most digital assets are not securities and noted independent fees and public blockchain trading data. Yuga Labs lawsuit dismissed: Judge rules BAYC NFTs not securities under Howey Test — read the ruling and implications for NFT buyers and markets. What is the ruling in the Yuga Labs lawsuit? Yuga Labs lawsuit dismissed by Judge Fernando M. Olguin concluded the plaintiffs failed to show Bored Ape Yacht Club (BAYC), ApeCoin (APE) and other Yuga NFTs qualify as securities under the Howey Test. The court held purchasers bought consumable digital collectibles and membership perks, not investment contracts tied to Yuga’s efforts. How did the court apply the Howey Test to BAYC and ApeCoin? The judge assessed the three Howey prongs—an investment of money, a common enterprise, and an expectation of profit produced by others—and found the plaintiffs proved none. The ruling noted Yuga marketed NFTs as collectibles with membership benefits and did not make explicit profit promises to buyers. Judge Olguin dismisses investor lawsuit against Yuga Labs. Source: Court Listener Why did the court find no common enterprise or profit expectation? Judge Olguin determined the NFTs’ trading on public blockchains and the transactional structure did not create the ongoing, dependent financial relationship required for a common enterprise. Fees paid to Yuga were treated as independent charges, and the roadmap and promotional statements did not equate to enforceable profit promises. The court emphasized: “Statements about a product’s inherent or intrinsic value are not necessarily statements about profit.” Even references to past prices or trading volumes were insufficient to establish an actionable expectation of profit under Howey. What evidence and precedent influenced the decision? The ruling referenced legal precedent that most digital assets are not automatically securities and examined specific contractual and marketing language from Yuga. Commentary from market participants and attorneys — including public posts by industry lawyers — were discussed as factual context without altering the court’s statutory analysis. { "@context": "https://schema.org", "@type": "NewsArticle", "headline": "Yuga Labs lawsuit dismissed: Judge finds BAYC and ApeCoin not securities under Howey Test", "description": "Yuga Labs lawsuit dismissed: Judge rules BAYC NFTs not securities under the Howey Test and finds no common enterprise or explicit profit promises.", "image": "https://en.coinotag.com/images/0199abe3-4502-79f8-bcbf-3bfe50df810b", "datePublished": "2025-10-03T08:00:00Z", "dateModified": "2025-10-03T08:00:00Z", "author": { "@type": "Organization", "name": "COINOTAG" }, "publisher": { "@type": "Organization", "name": "COINOTAG", "logo": { "@type": "ImageObject", "url": "https://en.coinotag.com/images/logo.png" } }, "mainEntityOfPage": { "@type": "WebPage", "@id": "https://en.coinotag.com/articles/yuga-labs-lawsuit-dismissed" }} { "@context": "https://schema.org", "@type": "HowTo", "name": "How the court applied the Howey Test to Yuga Labs NFTs", "description": "Step-by-step summary of how Judge Olguin evaluated whether Yuga Labs NFTs are investment contracts under the Howey Test.", "image": "https://en.coinotag.com/images/0199abe3-4502-79f8-bcbf-3bfe50df810b", "step": [ { "@type": "HowToStep", "name": "Identify the investment of money", "text": "The court reviewed whether purchasers provided money or its functional equivalent when buying NFTs." }, { "@type": "HowToStep", "name": "Assess common enterprise", "text": "The judge examined whether buyers’ fortunes were linked to Yuga Labs through an ongoing dependent financial relationship." }, { "@type": "HowToStep", "name": "Evaluate expectation of profit", "text": "The court analyzed marketing, roadmaps and public statements to determine if Yuga promised profits derived from others’ efforts." } ]} { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "Are BAYC NFTs and ApeCoin securities after this ruling?", "acceptedAnswer": { "@type": "Answer", "text": "No. The court dismissed the lawsuit, finding plaintiffs did not show BAYC NFTs or ApeCoin met the Howey Test requirements to be securities." } }, { "@type": "Question", "name": "What did the court say about promises of profit?", "acceptedAnswer": { "@type": "Answer", "text": "The judge ruled that product-value statements and mentions of trading volumes alone did not constitute explicit promises of profit sufficient to meet Howey’s expectation-of-profit prong." } }, { "@type": "Question", "name": "Does this ruling change SEC policy on digital assets?", "acceptedAnswer": { "@type": "Answer", "text": "This decision is a federal court ruling applying Howey to specific facts; it provides judicial analysis but does not unilaterally change SEC regulation or enforcement policy." } } ]} Frequently Asked Questions Do the court’s findings apply to all NFTs? The decision applies to the specific facts of the Yuga Labs case. It reinforces that classification depends on contractual terms, marketing, purchaser expectations and how tokens function in practice. What role did the project roadmap play in the ruling? The roadmap and forward-looking statements were reviewed but the court found they did not create enforceable promises of profit tied to Yuga’s efforts, and thus did not satisfy the Howey expectation-of-profit prong. Key Takeaways Legal outcome : Federal judge dismissed investor claims that BAYC and related NFTs are securities. Howey Test application : Plaintiffs failed to show a common enterprise or clear expectation of profit produced by Yuga. Market implication : The ruling underscores that NFT classification is fact-specific; creators should clarify marketing and purchaser expectations. Conclusion The Yuga Labs lawsuit dismissal clarifies how a federal court applied the Howey Test to iconic NFTs, emphasizing that marketing as consumable collectibles and the absence of explicit profit promises weigh against securities classification. Market participants should document product features and communications to reduce regulatory ambiguity. COINOTAG will monitor further developments and related rulings.
