This week, a class action lawsuit against encrypted payment company MoonPay and "boring ape" BAYC development company Yuga Labs has aroused the attention of the encryption community, because according to the latest court amendments, the well-known auction house Sotheby's has been included in the defendant list , Other defendants include Justin Bieber, Madonna, Jimmy Fallon, Kevin Hart, Stephen Curry and many other celebrities.

According to relevant information disclosed by the U.S. District Court of California, the reason why Sotheby’s will be sued is related to the auction house’s previous huge NFT auction in 2021. At that time, they claimed that a “traditional” art collector paid 2,440 A total of 101 "boring ape" BAYC NFTs were purchased at a price of US$10,000.

However, according to the plaintiff in the lawsuit, the NFT transaction actually misled the buyer because the buyer behind it was the collapsed cryptocurrency exchange FTX, while Sotheby's claimed that the anonymous buyer was a "traditional 』Collectors, which makes people think that the BAYC NFT market has shifted to a mainstream audience.

**Why can't an "old" institution like Sotheby's escape the prosecution of crypto investors? **

Perhaps you have noticed that today's crypto investors frequently file lawsuits, and even "old" institutions such as Sotheby's century-old auction houses are hard to escape. The root cause may be related to the current downturn in the NFT market.

Taking the past July as an example, the floor prices of major blue-chip NFT projects such as Azuki and Bored Ape Yacht Club (BAYC) have fallen sharply, and BAYC even fell below 30 ETH at one point. Not only that, the trading volume of the NFT market also continued to decline (as shown in the figure below). In the first week of July, the trading volume of NFT was about 182 million US dollars, and in the fourth week it dropped sharply to about 57.5 million US dollars. In just three weeks fell by nearly 68%. At the same time, the number of NFT sales has also declined, from approximately 727,413 to 368,331, a drop of nearly 50%.

This market volatility reflects the increased risk aversion of investors and the decline in confidence in the NFT market. Investors may become more cautious and unwilling to make risky investments, and those crypto investors who enter the market at a high floor price obviously cannot bear such a huge gap, so they will inevitably use some legal flaws in the transaction to file lawsuits Recover damages.

**The price of NFT has plummeted, who will pay for the loss? **

It is reported that the plaintiffs in this lawsuit are seeking a jury trial and are seeking damages of more than $5 million.

Frankly speaking, judging from Sotheby's current reaction, they should not compromise with those NFT investors who "buy losses", because the auction house has clearly stated in a statement-"In this lawsuit The allegations made are baseless and Sotheby's is prepared to vigorously defend itself."

High volatility in the NFT market is not uncommon. In 2021, the NFT of Twitter founder Jack Dorsey’s first tweet sold for as much as $2.9 million, but according to the author of the book "Black Swan", Nassim Nicholas Taleb (Nassim Nicholas Taleb) shared a tweet showing that the latest auction bid for the NFT was only $1.14.

For NFT assets, many people will be attracted by its scarcity, but this biggest feature may also be one of its shortcomings, and it is also the main reason for low liquidity. When the market lacks incremental funds to enter, the transaction volume It will come down, and the natural liquidity will be very poor, which will also cause the NFT market to fall into a "downward spiral".

It should be noted that although the NFT market has experienced a high fever, the entire industry is still in its infancy. While new concepts and new forms emerge in an endless stream, it also shows many uncontrollable risks and bubbles. The market is unstable and prices fluctuate greatly. Therefore, Be cautious about related investments.