NFTs
Dapper Labs Settles NBA Top Shot NFT Lawsuit for $4 Million
Dapper Labs, the blockchain company behind NBA Top Shot collectibles, has settled a class action lawsuit for $4 million, addressing allegations of securities law violations.
While the court awaits approval, the settlement will compensate plaintiffs and cover attorneys’ fees, providing Dapper Labs with a clearer legal framework to continue its operations.
If approved, plaintiffs will no longer be able to claim that Dapper Labs’ NBA-themed NFTs are securities.
“After discovery, it was understood and agreed that @Flow_blockchain is a decentralized public network and that digital collectibles like @NBATopShot are not securities in the same way that trading cards are not securities,” said the CEO of Dapper Labs, Roham Gharegozlou, in a declaration in X.
“Today’s resolution allows us to stay focused on what matters: creating great experiences for our fans.”
The lawsuit, filed in the U.S. District Court for the Southern District of New York, argued that NBA Top Shot Moments should be classified as unregistered titles, tying their value to the platform’s success.
Plaintiffs also alleged that Dapper Labs manipulated the market and delayed withdrawals.
The case attracted a lot of attention when a federal judge allowed it to proceed, indicating that Top Shot’s NFTs could meet the criteria for a securities offering.
This was in part because NFTs are hosted on the Flow blockchain, created by Dapper Labs, which the judge found to be less decentralized than networks like Bitcoin or Ethereum.
As part of the deal, Dapper Labs will implement business changes including transferring FLOW tokens to the independent Flow Foundation and allowing third-party marketplaces to sell Top Shot NFTs.
These measures, aimed at improving market fairness and withdrawal processes, were already in place before the agreement was reached.