Eden Gallery Seeks Dismissal of Class-Action Lawsuit Over NFT Value Decline

In a legal filing made on January 7 in a New York federal court, Eden Gallery argued that the general downturn in the NFT market, rather than fraud or misrepresentation, was responsible for the alleged decline in the value of its collection. The motion further suggests that a market-wide decrease in NFT values does not prove the claims made by the plaintiffs, who assert the gallery and artist Gal Yosef’s "Meta Eagle Club" collection was a scam.

In October 2023, 36 individuals filed a lawsuit accusing Eden Gallery and Yosef of fraud, unjust enrichment, and violations of New York's General Business Law. They argued that the Meta Eagle Club NFT collection, consisting of 12,000 unique humanlike eagle designs, was a "rug pull" after generating $13 million in sales between February 2022 and November 2023.

Eden Gallery pointed out in its defense that NFTs were highly popular when the Meta Eagle Club was launched, but the general market for NFTs saw a significant drop in demand following the early boom of 2022. The floor price for these NFTs has since plunged from 0.6 ETH (around $1,800) to just 0.0051 ETH (about $17), according to OpenSea data.

The plaintiffs claim they overpaid for their NFTs, citing alleged misrepresentations by Eden Gallery, and are seeking damages ranging from $1,224 to $70,219 per person. Eden Gallery, however, contends that the amount sought by individual claimants does not meet the $75,000 jurisdictional threshold required for a federal case and that claims cannot be aggregated to meet this amount.

Although the NFT market has seen some recovery with recent sales growth driven by the crypto market’s uptick, industry data from CryptoSlam indicates that NFT sales volumes in US dollars are still down by approximately 98% compared to their highs in early 2022.

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