Investors sued Dapper Labs The sale of NBA Top Shot Moments NFTS was alleged to violate security standards. Dapper Labs agreed to pay $4 million in settlement of the lawsuit. Roham Gharegozlou is the chief executive officer of Dapper Labs. He maintains that NBA Top Shots NFTs aren’t securities and this settlement supports his claim.
Settlement with a group class of investors ends a lawsuit filed in 2021 that required Dapper Labs pay $4m contingent upon plaintiffs no longer claiming NFTs were securities. Dapper Labs also plans to make changes in order to comply with the law. Flow blockchain Decentralization, and a program of staff training on securities laws.
Gharegozlou said that legal discoveries confirmed NFTs presence in a public decentralized network and likened them to trading cards, which are not securities. This was crucial, because it aligned with the core mission of the company.
Dapper Labs pays the $4million settlement to the plaintiffs if they agree not to claim NFTs as security. Dapper Labs also commits to ensuring decentralization of the Flow Blockchain, giving up control of remaining Flow Tokens to the Flow Foundation. The program will include a mandatory training on securities laws.
Legal Approval Pending
Victor Marrero, District Judge, must approve the settlement. In February 2023 Judge Marrero refused Dapper’s request to dismiss the case, stating that NFTs might be considered securities according to the Howey Test.
In 2021, a class action was filed arguing that NBA NFTs are securities because of their possible price increases with increased popularity. Dapper Labs refuted that, comparing NFTs with traditional trading cards.
This settlement addresses the claims made by Dapper Labs that it restricted NFTs sales on other platforms. Dapper Labs gave permission to trade on other platforms from March 20, 2022, according to the settlement.
Summary: The settlement of $4 million highlights that NBA Top Shot NFTs have been classified as non-securities. This is a landmark development in the NFT market.
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Source: nftevening.com