A US federal judge has tossed a high-profile investor suit that accused Yuga Labs of selling unregistered securities through Bored Ape Yacht Club (BAYC) NFTs and ApeCoin.
The decision, handed down by Judge Fernando M. Olguin, found that the plaintiffs did not meet the legal test for an investment contract.
According to reports, the suit dated back to 2022 and was aimed at forcing a legal finding that the tokens were securities; the court disagreed and dismissed the case.
Judge Found Howey Test Unmet
Judge Olguin ruled the plaintiffs failed to show all three prongs of the Howey Test were satisfied. Based on reports, the court said buyers were not shown to have a shared enterprise tied to Yuga’s efforts, nor were they promised returns that would come primarily from Yuga’s work.
The judge emphasized that many BAYC sales were framed as collectibles and membership benefits rather than investment contracts.
Source: US District Court Central District of California.
Plaintiffs Had Argued For Profit Expectations
The investors argued that market talk about trading and rare traits created profit expectations. The court, however, saw those claims as too thin to convert a collectible into a security.
Purchasers’ fortunes, the ruling noted, were not made to depend directly on Yuga’s future business actions in the way required by securities law. This narrower view left the complaint without the necessary legal footing.
Regulators Still Watchful
Reports say the SEC has taken enforcement steps in other NFT cases, meaning the space remains under close regulatory scrutiny.
Historical actions noted by regulators included instances associated with projects that provided revenue sharing or paid promotional aspects. Courts have not always offered a consistent interpretation of their findings.
That uncertainty means that creators and platforms may be facing legal exposure even after the ruling.
Not A Complete Shield For NFTs
Legal experts cautioned that the ruling does not imply that all NFTs are free from securities claims.
Yuga Labs itself has faced other legal fights; in July 2025 an appeals court overturned an $8.8 million judgment that Yuga had won in a trademark dispute and sent that matter back for trial. The mixed outcomes in related suits show courts are treating each case on its own facts.
The decision is expected to offer some reassurance to NFT holders and marketplaces, since one major challenge was dismissed.
Still, projects that promise revenue sharing, profit splits, or that are marketed mainly as investments could attract a different outcome if challenged. The ruling is useful, but it is not a universal safe harbor.
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