A group of non-fungible token (NFT) buyers has been urged to dismiss a lawsuit they filed against an art gallery. In a New York federal court lawsuit, Eden Gallery argues that it is not liable for NFT value losses in the market. On Jan. 7, the gallery argued that just as the broader NFT market cratered, that was not a sign of fraud or misrepresentation in its dealings.
Eden Gallery accused of fraud in Meta Eagle Club NFTs
The lawsuit, filed in Oct. 2023, involves 36 plaintiffs who purchased NFTs from the “Meta Eagle Club” collection. The group alleges that Eden Gallery and artist Gal Yosef engaged in fraud enrichment and violated New York’s General Business Law.
They accuse the gallery of orchestrating a “rug pull,” selling 12,000 humanlike eagle NFTs and generating $13 million between February 2022 and Nov. 2023. Plaintiffs argue they overpaid due to alleged misrepresentations and are seeking compensatory damages ranging from $1,224 to $70,219 per individual.
Lawsuit outcome could shape future NFT legal disputes
Eden Gallery’s defense highlights the broader decline in the NFT market since early 2022. When the Meta Eagle Club collection launched, NFTs were extremely popular. However, market enthusiasm has since dropped sharply, with NFT sales volumes down by 98% from their peak, according to CryptoSlam. The price for a Meta Eagle Club NFT has fallen drastically, from 0.6 ETH at launch to just 0.0051 ETH
The gallery contests that no fraudulent activity was shown in the lawsuit and blames the overall market downturn. Additionally, the individual claims fail to meet the $75,000 jurisdictional threshold, and federal law does not permit aggregating the claims.
The crypto market has recently experienced an unassuming recovery, but the NFT sector is still far behind those highs. This lawsuit could set a precedent for handling similar cases as the NFTs market grows.