Nelk Boys Accused of $23M NFT Scam

The Nelk Boys, a group of popular YouTubers, have been accused in a lawsuit of failing to deliver on their promises for a non-fungible token (NFT) project that raised $23 million. The complaint, filed by Trenton Smith in a California federal court, alleges that the group, which includes Kyle Forgeard and John Shahidi, acted as "snake-oil salesmen masquerading as entrepreneurs."

The lawsuit claims that the Nelk Boys offered various perks to attract investors to their NFT project, Metacard, but ultimately failed to deliver on their promises. These perks included discounts on their branded merchandise, access to an event with rapper Snoop Dogg, and a $250,000 giveaway to NFT holders. Despite these promises, the lawsuit alleges that Metacard holders have not seen any return on their investment.

The lawsuit also claims that the Nelk Boys minted 10,000 NFTs in January 2022, with the project selling out in minutes. Each NFT was sold for $2,300, but the lawsuit alleges that the Metacards held no intrinsic value other than the promised amenities and perks. The current floor price for a Metacard on the NFT marketplace OpenSea is 0.034 Ether (ETH), worth approximately $111.

Smith's lawsuit seeks damages, equitable relief, restitution, and disgorgement of funds generated through the NFT sales, as well as attorney's fees. The Nelk Boys have not yet responded to the lawsuit. The case follows other lawsuits against firms that have launched NFT projects, including a September suit against OpenSea, in which two users claimed the platform sold unregistered securities.

The broader NFT market has been struggling in recent years, with a report finding that 2024 was the worst year for trading and sales volumes since 2020. The lawsuit against the Nelk Boys highlights the ongoing concerns about the lack of regulation and oversight in the NFT market, as well as the potential for fraud and misrepresentation in the industry.