Eden Gallery says NFT holders can’t sue over market decline

Eden Gallery has argued that a class-action lawsuit filed by NFT holders should be dismissed, citing that any losses experienced by the plaintiffs are the result of a broader market downturn, not fraud or misrepresentation.

In a motion to dismiss filed in a New York federal court on January 7, Eden Gallery stated that a “general market decline” in NFTs does not indicate that fraudulent activity occurred, as alleged by the plaintiffs.

“Plaintiffs may have buyers’ remorse (even though the NFTs were a digital art product rather than an investment product), but their losses, if any, are due to market forces,” the motion emphasised.

The class-action lawsuit was initiated by a group of 36 individuals who had purchased Meta Eagle Club NFTs, alleging fraud, unjust enrichment, and violations of New York's General Business Law.

The plaintiffs claim that the NFT project, led by artist Gal Yosef, was a “rug pull.”

The Meta Eagle Club NFT collection, consisting of 12,000 unique humanlike eagles, raised $13 million between February 2022 and November 2023.

Eden Gallery responded by pointing out that while the Meta Eagle Club NFTs gained popularity in early 2022, the overall NFT market experienced a significant decline, which contributed to the drop in value.

The floor price for a Meta Eagle Club NFT has plummeted from 0.6 ETH (CRYPTO:ETH) (approximately $1,800) to 0.0051 ETH (around $17), according to OpenSea data.

The plaintiffs are seeking compensatory damages ranging between $1,224 and $70,219 per individual.

Eden Gallery also contended that the plaintiffs’ individual claims do not meet the $75,000 jurisdictional threshold required for federal court and that the aggregation of claims is not permissible.