U.S. Court Dismisses Case, Declares BAYC NFTs and ApeCoin Are Not Securities

Judge Fernando M. Olguin ruled that BAYC NFTs and ApeCoin do not meet the Howey test criteria for securities.

The court found no common enterprise or profit expectation linking Yuga Labs and NFT holders.

The decision narrows SEC oversight and sets a precedent for NFT projects marketed as digital collectibles.

A U.S. federal court has ruled that Bored Ape Yacht Club (BAYC) NFTs and ApeCoin do not qualify as securities. The decision, delivered by Judge Fernando M. Olguin in California, dismissed a long-standing lawsuit filed against Yuga Labs, the company behind the NFT collection. The case, first brought in 2022, accused Yuga of selling unregistered securities and misleading buyers about future profits.

According to a report by Finance Feeds, Judge Olguin stated that the plaintiffs failed to prove the assets met the legal standards of the Howey test. This test is used by the U.S. Securities and Exchange Commission (SEC) to determine whether a transaction counts as an investment contract. According to the ruling, BAYC NFTs and ApeCoin did not satisfy the three required elements: investment intent, common enterprise, and profit expectation tied to others’ efforts.

No Common Enterprise or Profit Expectation Found

The court determined that Yuga Labs did not create a shared financial structure linking NFT holders and the company. Investors paid a one-time fee to mint their NFTs, separating their ownership from Yuga’s later activities. Attorney Bill Hughes from Consensys explained that this payment model made the NFTs independent of Yuga’s financial performance.

Judge Olguin added that general remarks about NFT prices or market volume were not enough to prove profit expectation. He wrote that comments about intrinsic or market value did not automatically transform these assets into investment products. Without clear promises of future returns, the NFTs functioned as consumable goods rather than securities.

Legal Implications for NFT Regulation

This ruling marks another legal reference point limiting the SEC’s authority over NFT markets. U.S. courts have consistently maintained that digital collectibles marketed as consumables, not investments, fall outside securities law. The decision reinforces the need for clear evidence of profit-based marketing when applying securities regulations to NFTs.

For regulators and plaintiffs, the case highlights the difficulty of proving investment intent in decentralized digital ecosystems. The court reaffirmed that NFT projects emphasizing access, membership, or cultural value differ from traditional financial instruments. As a result, many NFT collections may continue operating without being subject to the same registration requirements as securities.Yuga Labs, established in 2021, has become a major name in digital collectibles. Its BAYC collection grew into one of the most recognized NFT brands worldwide. The court’s ruling removes one of the most significant legal challenges faced by the company. The decision also provides legal clarity for other NFT issuers. It sets a precedent indicating that unless projects explicitly promote financial returns, they remain outside securities classification under U.S. law.