Shaquille O’Neal’s NFT Lawsuit Partially Dismissed by U.S. Federal Court

A U.S. federal court has partially dismissed a class-action lawsuit against former NBA star Shaquille O’Neal, which involved his role in promoting the NFT project Astrals.

The decision, handed down by the U.S. District Court for the Southern District of Florida, addresses allegations that O’Neal misled investors by endorsing the project, which included 10,000 3D NFT avatars and a decentralized autonomous organization (DAO) focused on fostering innovation.

Allegations of Misleading Promotion

The lawsuit accused O’Neal of being the public face of Astrals, encouraging investors to participate in the project with promotional phrases such as, “Hop on the wave before it’s too late.”

Despite the collapse of the FTX cryptocurrency exchange in November 2022, O’Neal continued to show public support for Astrals, even sharing a GIF from The Wolf of Wall Street in the project’s Discord channel, suggesting his ongoing commitment.

Court Ruling: Dismissal and Upheld Allegations

The court dismissed the claim that O’Neal was a “control person” within Astrals, which would have implied that he held actual power over the project’s operations. However, the court upheld the allegation that O’Neal could be considered a “seller” under legal definitions, as he successfully solicited the purchase of Astrals products, despite not holding an official position within the company.

Additionally, the court did not dismiss the accusation that Astrals sold unregistered securities, a central issue in ongoing legal debates surrounding cryptocurrency and NFTs.

Impact on Future Cases

Adam Moskowitz, the attorney representing the investors, described the ruling as significant, noting that it provides much-needed clarity in the complex area of cryptocurrency and celebrity endorsements.

He suggested that this decision by District Judge Moreno could influence the outcomes of other pending cases involving similar issues.

O’Neal and Astrals to Respond to Remaining Allegations

Shaquille O’Neal and the Astrals project team are expected to respond to the remaining allegations by September 12, 2024.

Declining Interest in NFTs

The case comes amid a broader trend of companies stepping back from the NFT space. Major brands like Starbucks, GameStop, and X (formerly Twitter under Elon Musk’s ownership) have recently discontinued their NFT-related features, signaling a shift in the industry.

Despite this decline, there are still positive developments, such as Cristiano Ronaldo’s collaboration with Binance on his fourth NFT collection, though the football star himself faces legal challenges related to his involvement in NFT sales.

Summary: A U.S. federal court has partially dismissed a lawsuit against Shaquille O'Neal regarding his involvement with the Astrals NFT project. While the court cleared O'Neal of claims that he was a "control person," it upheld allegations that he acted as a "seller" of unregistered securities, potentially impacting future cases related to celebrity endorsements in the crypto space.