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Earlier this month a paparazzi photo at Vogue.com showed pop star/actress Lady Gaga on a coffee run in Malibu, Calif., with the "perfect" custom Labubu hanging from her sleek, black Hermès Kelly bag.

The Seattle Customs and Border Patrol seized over half a million dollars worth of fake Labubus, weeks after federal safety regulators warned the public not to buy the counterfeit versions of the toy.

In the quiet corners of Connecticut, a mischievous forest creature is stirring up excitement—not in the woods, but on shelves, screens, and collector wish lists. Labubu, the impish character that ...