Video game developer Dapper Labs has settled a class-action lawsuit for $4 million, according to a New York District Court filing.
A group of investors initiated the lawsuit in 2021, alleging that the firm sold unregistered securities through its NBA Top Shot Moments non-fungible tokens (NFTs).
CEO Roham Gharegozlou claims this settlement confirms that the NBA NFTs do not qualify as securities.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe – We publish new crypto explainer videos every week!
On June 4, Gharegozlou took to social media to explain that the legal findings established the NFTs as part of “a decentralized public network,” thus ensuring they “are not securities in the same way trading cards are not.”
The settlement specifies that if the plaintiffs withdraw their claims that the NFTs are securities, Dapper Labs will pay $4 million.
Additionally, the firm must implement changes to ensure its Flow blockchain is sufficiently decentralized. This includes transferring any remaining Flow tokens it controls to the Flow Foundation and introducing an annual training program for staff on federal securities laws.
Despite the agreement, the settlement still requires approval from District Judge Victor Marrero. In February 2023, Judge Marrero denied Dapper Labs’ motion to dismiss the lawsuit, suggesting the NFTs might be considered securities:
Rather, it is the particular scheme by which Dapper Labs offers Moments that creates the sufficient legal relationship between investor and promoter to establish an investment contract, and thus a security, under Howey.
Nonetheless, 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 other news, Dapper Labs has previously collaborated with Disney to create an NFT platform, Disney Pinnacle.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
