Dapper Labs settles NBA Top Shot NFT lawsuit for US$4 mln

Dapper Labs, the blockchain company behind the NBA Top Shot collection, has filed a $4 million class-action lawsuit alleging securities law violations.

The settlement, pending court approval, will compensate plaintiffs and cover attorney fees and provide 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 accepted that @Flow_blockchain is a decentralized public network and that digital collectibles like @NBATopShot are not securities, just like trading cards are not securities,” Dapper Labs CEO Roham Gharegozlou said in a statement about said.

“Today’s decision allows us to focus on what’s important: creating great experiences for our fans.”

In the legal appeal filed with the US District Court for the Southern District of New York, it was argued that the values ​​​​of NBA Top Shot Moments should be attributed to the success of the platform and classified as unregistered securities.

Plaintiffs also alleged that Dapper Labs manipulated the market and delayed withdrawals.

The case received widespread attention after a federal judge allowed it to proceed, stating that Top Shot NFTs could meet securities offering criteria.

This is partly because NFTs are hosted on the Flow blockchain, created by Dapper Labs and dominated by networks like Bitcoin or Ethereum, which is less decentralized than networks like Bitcoin or Ethereum.

As part of the agreement, 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 solution was reached.