(This article has been revised.)

In addition to developing popular non-fungible token projects like Bored Ape Yacht Club, web3 platform Yuga Labs Inc. now owns digital art and web3 company Proof Holdings Inc. Through the merger, Yuga will acquire the team and intellectual property of Hollywood-based Proof, including its NFT community, Proof Collective. Proof Collective encompasses large NFT collections and projects such as Moonbirds, Oddities and Grails. 

Proof was co-founded in 2021 by Justin Mezzell and Kevin Rose; Rose is now the chief executive of Proof. Yuga said that it wants its company to become the “front door of web3,” a goal that will be bolstered by this acquisition. Yuga plans to add Moonbirds to Otherside, a web3-powered metaverse project from Yuga that centers on its Bored Ape Yacht Club collection. The Moonbirds NFT project is a 10,000-piece collection of digital media and art that was created by Mezzell. According to NFT data aggregator CryptoSlam, Moonbirds accrued about $2.5 million in sales in January, compared to $7.6 million in January of last year.

Shortly following the Proof acquisition announcement, Yuga Labs announced that its co-founder, Greg Solano, would replace Daniel Alegre as chief executive. Alegre, who previously served as president and chief operating officer of Santa Monica-based Activision Blizzard Inc., had held the role of chief executive at Yuga Labs since April of last year.

“As a company committed to championing art, culture and community on the blockchain, we’re excited to have Proof join the Yuga ecosystem,” Alegre said in a statement. “Moonbirds is a collection with great potential and many unifying brand elements with Otherside. We look forward to Proof Collective becoming an important part of our ongoing art and community engagement efforts.”

Rose, who also serves as a partner at Palo Alto-based venture capital firm True Venture Management LLC, will become an adviser to Proof after a brief handover period. He said the combination with Yuga will be an “exciting journey.” In a December note to employees, Rose had previously denied that an acquisition of Moonbirds was impending.

“We’re very excited to bring Moonbirds into Otherside,” Rose said in a statement. “It’s the perfect home and future for our collectors. With the Proof Collective on board, it shows Yuga’s commitment to digital fine art, and our combined resources will allow us to innovate faster and reach more people.”

The acquisition proceeds a prolonged decline in the NFT market in 2022 and the first half of 2023, which was aggravated by the collapse of Silicon Valley Bank in March of last year. Many NFT companies, including Proof, had funds at the bank. On Feb. 16, the day the acquisition was announced, Moonbirds NFT sales jumped to $2.6 million, up 788% from the previous day, according to CryptoSlam.

Both Yuga Labs and Proof announced layoffs in October, though neither disclosed the exact number of employees affected. A Yuga spokesperson said that 15 members of Proof’s team will join Yuga, bringing its total headcount to 140. The spokesperson declined to state if there would be any layoffs at Proof as a result of the deal or disclose further terms of the transaction.