Judge Rules Bored Ape NFTs and ApeCoin Are Not Securities

A U.S. federal judge has dismissed a long-running investor lawsuit against Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) and ApeCoin, ruling that neither its NFTs nor the associated token qualify as securities under American law.

The case, filed in 2022, alleged that Yuga improperly sold unregistered securities and misled investors about profit potential. But Judge Fernando M. Olguin of California concluded that the plaintiffs failed to meet the Howey test, the legal framework used by the SEC to define investment contracts.

Court Rejects Security Claims

Olguin wrote that BAYC NFTs were marketed as digital collectibles with membership perks rather than speculative instruments. While defendants highlighted benefits such as access and community participation, these did not amount to promises of financial returns. “Statements about prices and trading volumes alone fail to establish an expectation of profit,” the ruling noted.

The judge also rejected the claim that Yuga created a “common enterprise” where investor gains were tied to the company’s ongoing efforts. Unlike traditional securities, BAYC NFTs involved one-time minting fees, with no direct financial link between Yuga and secondary market values.

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Implications for NFTs and Regulation

The decision narrows the SEC’s authority over non-fungible tokens, reinforcing prior rulings that most NFTs fall outside securities law when marketed as consumables. Consensys attorney Bill Hughes said the case underscores how NFTs differ structurally from tokens that raise capital through investor reliance.

For the broader industry, the dismissal sets a legal precedent limiting class-action risks tied to collectible projects. However, it also highlights the difficulty regulators face in stretching securities law to cover emerging digital assets.

As the SEC intensifies enforcement across the crypto sector, this ruling signals that courts may continue to draw a firm line between digital collectibles and financial securities, a distinction that could shape the future of NFT projects in the United States.

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