Landmark Ruling Rejects Claims Under SEC’s Howey Test

A U.S. judge has thrown out an investor lawsuit against Web3 powerhouse Yuga Labs, concluding that the company's Bored Ape Yacht Club (BAYC) and related NFTs cannot be classified as securities under federal law. The ruling signifies a high-profile legal victory both for Yuga Labs and the evolving NFT regulatory landscape, which could be commonly misunderstood by fans.

Judge Fernando M. Olguin who presided over the case, ruled that plaintiffs failed to prove BAYC NFTs, ApeCoin, or other Yuga offerings met the legal definition of “investment contracts” as established by the SEC’s three-pronged Howey Test. The lawsuit, filed in 2022, argued that Yuga’s marketing of digital collectibles constituted an offer of unregistered securities—a claim that did not hold up in court.

Olguin found that Yuga Labs marketed its NFTs as digital collectibles offering exclusive club-style membership perks, framing them as consumable assets rather than speculative investments.

“The fact that defendants promised that NFTs would confer future, as opposed to immediate, consumptive benefits does not alone transmute those benefits from consumptive to investment-like in nature."

The court also noted plaintiffs did not show that buyers entered into a “common enterprise” with Yuga Labs. In other words, the NFTs traded on the public blockchains lacked any financial arrangement between the purchasers and the company.

Olguin further explained that while statements about product value or NFT trading volumes might spark speculation, these alone are not sufficient to establish an expectation of profit necessary to designate NFTs as securities.

Importantly, payments for Yuga NFTs were made independently of NFT price movements, and Yuga’s project roadmap did not amount to explicit profit promises.

“Statements about a product’s inherent or intrinsic value are not necessarily statements about profit. Statements about NFT prices and trade volumes are a somewhat closer call, but even then, these statements by themselves fail to establish an expectation of profit.”

This verdict delivers a notable boost for Yuga Labs and the wider NFT sector, reinforcing that not all digital assets fall under the SEC’s securities rules—at least for now.

Similar Wins For Nike And StockX

The Yuga Labs victory wasn’t an isolated event. In another recent case, sportswear giant Nike and marketplace StockX have also brought their long-running NFT dispute to a close — another case that underscores the shifting legal landscape around digital collectibles.

The two companies settled their nearly three-year legal battle over sneaker-linked NFTs, abruptly ending what could have been a landmark trial in digital asset and intellectual property law.

Nike had accused StockX of trademark infringement and counterfeiting through its “Vault” NFTs, which featured images of Nike-branded sneakers. However, rather than escalating the dispute in court, both sides chose to settle, dismissing all claims with prejudice.

The case, much like the Yuga Labs ruling, highlights how courts and corporations alike are beginning to differentiate NFTs as digital representations of ownership rather than securities or profit schemes.

It’s another example of how the NFT space is maturing legally — and how even global brands are being forced to navigate this new terrain of digital asset rights and definitions.

Courts Are Defining the Future of Web3

Beyond the courtroom, this case underscores how misunderstood the NFT ecosystem still is in mainstream legal and financial circles. The rush to treat every blockchain product like a security often ignores the cultural and technological nuance that defines Web3. Yuga Labs’ win doesn’t just protect one company—it protects an entire creative economy built on ownership, digital identity, and social value.

Still, the case is a wake-up call for NFT projects to communicate utility clearly and avoid profit-driven marketing narratives that could draw regulatory scrutiny. In the end, the incident highlights an ongoing clash between innovation and regulation—one that will define the future of digital property rights for years to come.