Three holders of Magic Eden’s ME token have filed a class action lawsuit against the NFT marketplace and its co-founders, alleging that changes to the project’s compensation system and governance reduced the token’s utility and harmed long-term participants.

The plaintiffs argue that Magic Eden changed how users are compensated, moving away from rewards centered on ME and toward a structure focused more heavily on USD Coin. According to the claims described in the filing, that shift weakened the token’s practical role inside the ecosystem and altered expectations for users who committed to longer lock-up periods.

Ben Gruenbaum, identified as a former contributor to Magic Eden’s community data analysis, said on the 10th that long-term locked users were affected by changes across the ecosystem. He said that, from a fixed supply of 1 billion ME tokens, 225 million were allocated to active user rewards over four years, with a maximum lock-up period of four years.

The complaint also comes after a series of product changes at Magic Eden. The company stopped supporting Bitcoin and EVM marketplaces on March 9 and ended wallet service support on April 1. Starting in February, 15% of total revenue was allocated to the ME ecosystem for ME buybacks and USDC rewards for stakers, according to the information cited in the dispute.

The lawsuit centers on consumer protection and false advertising claims. The plaintiffs say those operational and compensation changes diminished the value proposition attached to ME. At the same time, Magic Eden is described as shrinking parts of its product lineup while shifting toward new business initiatives, with further details on future products and incentive design still unclear.

Why It Matters

The case goes beyond one marketplace’s token dispute because it touches a recurring issue in crypto: whether governance tokens retain meaningful utility after platforms revise business models, reward systems, or product scope. When a project changes how economic value is distributed, legal scrutiny can follow if users believe the original structure materially shaped their decision to participate.

For the broader market, the lawsuit highlights the tension between operational flexibility for crypto platforms and expectations from token holders who locked capital or relied on published incentive frameworks. That makes the outcome relevant for other projects using token rewards, staking benefits, and buyback-linked ecosystem designs as part of their user acquisition strategy.