Art Gallery Claims NFT Holders Can’t Sue Over Market Decline

Eden Gallery, an international art gallery, stated that a group of NFT holders “may have buyers’ remorse, but their losses, if any, are due to market forces.”

The art gallery rejected responsibility for NFT (non-fungible token) holders’ losses, arguing that the class action should be thrown out since it cannot be accountable for declines in NFT prices caused by a broader market downturn.

In an attempt to dismiss the case, submitted to a New York federal court on Jan. 7, Eden Gallery Group claimed that “general market decline” in NFTs doesn’t prove that fraud or misrepresentation took place as claimed.

“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.”

In October, a group of 36 people who bought “Meta Eagle Club” NFTs filed a lawsuit against Eden Gallery. The group accused the gallery of fraud, unjust enrichment, and violating New York’s General Business Law.

🚨 NFT Investors Claim $13M “Rug Pull” in Shocking Lawsuit Against Art Gallery! 🚨

In a recent lawsuit, a group of 36 NFT investors has filed claims against Eden Gallery Group Ltd. and artist Gal Yosef for allegedly running a deceptive NFT and metaverse scheme. The lawsuit… pic.twitter.com/bktUivw2Vx

— 🐶 Anh | Corgi Studio (@corgi408) October 10, 2024

The NFT holders claimed that Eden Gallery and Gal Yosef’s project “was a rug pull.” The Meta Eagle Club NFT collection sold 12,000 one-of-a-kind, humanlike eagles, raising $13 million from February 2022 to November 2023.

Eden Gallery stated that “NFTs were an extremely popular asset class when the Meta Eagle Club NFTs launched in early 2022, but the overall popularity of the NFT market subsequently declined.”

Currently, the starting price for a Meta Eagle Club NFT is 0.0051 ETH, or approximately $17. This represents a drop from 0.6 ETH, or around $1,800, when the NFTs were launched in February 2022, according to OpenSea.

The group of NFT owners alleges they overpaid NFTs due to misrepresentations by Eden Gallery. They require compensatory damages between $1,224 and $70,219 per claimant.

However, the gallery further argued that each plaintiff’s claim falls below the $75,000 jurisdictional threshold and that combining the claims is not permitted.

NFT sales recently increased, driven by the crypto market bull run. Despite this increase, the sector is still 98% down in US dollar sales volumes from its peak in early 2022, the industry analytics portal CryptoSlam claims.

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