NFTs
Dapper Labs Settles NBA Top Shot Lawsuit for $4 Million
The creators of NBA Top Shot and other network collectibles, Dapper Labs, have finally settled the class action lawsuit, agreeing to pay $4 million.
Good news! Us @dapperlabs Today we announce a legal resolution that reaffirms two of our most important positions:
After the discovery, it was understood and agreed that @Flow_blockchain is a decentralized public network and that digital collectibles like @NBATopShot they are not…
– roham (@roham) June 4, 2024
Dissatisfied consumers alleged that Top Shot NFTs were illegal securities, leading Dapper Labs to agree to pay $4 million to the plaintiffs for their damages and costs incurred, as stated in court Monday. filings.
Roham Gharegozlou, CEO of Dapper, said that with the deal, anyone who wants to claim that Top Shot NFTs are securities will be stopped once the deal is approved. This legal certainty is important and allows Dapper Labs to focus on creating great user experiences.
It was a major blow to the case last February when a federal judge allowed the case to move forward. The judge also analyzed Top Shot NFTs as potentially qualifying as securities because they are on Dapper Labs’ Flow blockchain.
The judge also highlighted that Flow was a “private” blockchain, different from Bitcoin or Ethereum, which raised doubts in control and implied statements of value growth from Dapper.
Despite Dapper’s portrayal of Flow as decentralized, the deal includes demands for business adjustments such as transferring FLOW tokens from the Ecosystem Reserve to the Flow Foundation, enabling third-party marketplaces for Top Shot NFTs, and improving the handling of withdrawals.
This case began in 2021, when the digital asset market was expanding and the legal status of NFTs was questioned. Unlike other digital tokens, NFTs have not received the same level of rejection as securities in most cases despite regulatory measures.
In all, the Dapper Labs deal eliminates legal questions surrounding NBA Top Shot NFTs, allowing the company to turn its attention to improving the experience for its users. It also captures current and emerging regulatory concerns and changes in practice observed in the cryptoasset industry.
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