Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the lawsuit of Astrals where Shaquille O’Neal has been accused of being the public face of the project.
Astrals
A United States federal court have partially dismissed a class-action lawsuit which was filed against former basketball superstar Shaquille O'Neal. The lawsuit related to his involvement in the NFT project known as Astrals. The Basketball Hall of Fame and NBA championship winner received the split verdict in his NFT court case by the U.S. District Court for the Southern District of Florida.
O'Neal has faced allegations of promoting the project, which included 10,000 3D NFT avatars as part of a decentralized autonomous organization (DAO), and had accused him of playing a role in being the public face of Astrals which in turn influenced investors to join the project. He used phrases such as “Hop on the wave before it’s too late.” to incentivise investors to join the DAO, which is aimed at 'fostering' innovative projects.
The unregistered securities class action lawsuit against O'Neal began in May 2023 in relation to the Solana-based NFT project. The project also had its over token, known as Galaxy, to help govern the DAO. The verdict in the U.S. District Court for the Southern District of Florida, Miami Division, was presided over by Judge Federico Moreno, and noted that O'Neal did not have wider control over the project, although his involvement as a “seller” has been confirmed.
Court documents noted that O'Neal played a role in promoting the project across multiple online channels, including in a video in which he allegedly said that the Astrals team would not stop developing the project until the NFTs reached the price of 30 SOL. Plaintiffs went on to claim that the former basketball star had continued to promote the project on various online communities during the collapse of FTX in November 2022, but disappeared from the project soon after. The price of the project eventually plummeted with the current floor price sitting at a mere 0.1769 SOL. The court document noted:
“Plaintiffs claim that O'Neal knew or should have known of potential concerns about regulatory issues concerning the sale of unregistered crypto securities, but nevertheless extensively promoted the Astrals Project to his large following on a multitude of social media platforms.”
The verdict is a mixed bag for O'Neal, who has managed to successfully defended himself against claims that he was a “control person” in the Astrals project. While this means he cannot be held liable for the project’s alleged securities violations, he was found to have played a role as a 'seller' through his promotion of the project to his vast array of followers along with encouraging them to invest in the project. The court has yet to rule on whether or not the Astrals NFTs and Galaxy tokens are considered securities, but if they are found to be securities then O’Neal could face legal consequences for his role in promoting them.
With the case still ongoing, both O’Neal and the Astral project are required to respond to the remaining allegations by September 12, 2024. How the case plays out and its outcome will likely have a significant impact on the legal landscape surrounding celebrity endorsements in the cryptocurrency space. The attorney representing the investors in this case, Adam Moskowitz, noted how the ruling will potentially have an impact on other similar lawsuits. He stated that the decision by District Judge Moreno provides much-needed clarity in the complex area of cryptocurrency and celebrity endorsements. Moskowitz noted:
“We are extremely fortunate that Judge Moreno authored the first extensive ruling on cryptocurrency and celebrity promotions.”
It was not the first involvement O'Neal had in the NFT space, with the former basketball star having previously created 10,000 NFTs as part of the Shaq Gives Back campaign for his charity, The Shaquille O’Neal Foundation. At the time a post was created on the foundations website, which has since been removed, but it read:
“Shaquille O’Neal is jumping on the new NFT bandwagon to do good deeds. The NBA legend recently partnered with The Notables to create unique images of himself and sell them.”
There has been a growing trend of companies distancing themselves from the NFT of late, with Starbucks, the renowned multinational coffee chain, ending their NFT rewards program back in March of this year. In January the gaming retailer GameStop announced the closure of its NFT marketplace after scaling back its crypto services over the past two years. Possibly most notable was 'X,' the social media platform owned by Elon Musk, discontinuing their feature which allowed premium users to use NFT images as their profile pictures.
These have been troubled times for the NFT sector, but with each ruling and the lawsuits ahead, likely clarity will be brought to the space and potentially it could signal a new and less 'Wild West' feel to the NFT space in the future.
Have a great day.
Peace. CryptoGod-1.
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