Dapper Labs Settles Class-Action Lawsuit for $4 Million, Confirms NBA NFTs are Not Securities
Video game developer Dapper Labs has reached a $4 million settlement in a class-action lawsuit filed in a New York District Court. The lawsuit, initiated by a group of investors in 2021, alleged that the firm sold unregistered securities through its NBA Top Shot Moments non-fungible tokens (NFTs).
CEO Roham Gharegozlou has stated that this settlement confirms that the NBA NFTs do not qualify as securities. In a social media post on June 4, Gharegozlou explained that the legal findings established the NFTs as part of a decentralized public network, similar to trading cards.
As part of the settlement, Dapper Labs will pay $4 million if the plaintiffs withdraw their claims that the NFTs are securities. The firm must also make changes to ensure its Flow blockchain is sufficiently decentralized, including transferring remaining Flow tokens to the Flow Foundation and implementing an annual training program for staff on federal securities laws.
The settlement still requires approval from District Judge Victor Marrero, who previously denied Dapper Labs’ motion to dismiss the lawsuit in February 2023. Despite this, the settlement reinforces Dapper Labs’ position that the NBA NFTs are not securities and includes measures to ensure compliance with decentralization and securities laws.
In addition to this legal development, Dapper Labs has collaborated with Disney in the past to create an NFT platform called Disney Pinnacle. Stay tuned for more updates on this evolving story.
