A federal judge, Victor Marrero, ruled on Wednesday that the NBA Top Shot non-fungible tokens (NFTs) provided by Dapper Labs may satisfy the requirements to be considered an unregistered security. The case developed in 2021 when an NBA Top Shot collector took legal action against Dapper Labs, declaring that the NBA Top Shot NFTs, referred to as “Moments” provided through the Flow blockchain, are securities.
Judge’s Ruling Allows Friel v. Dapper Labs Case to Continue
United States District Court judge Victor Marrero concurred with the complainants who submitted a suit versus Dapper Labs on Feb. 22, 2023, keeping in mind that NBA Top Shot NFTs might plausibly be unregistered securities in the eyes of the law. On May 13, 2021, Jeeun Friel taken legal action against Dapper Labs for selling Top Shot NFTs without signing up with the U.S. Securities and Exchange Commission (SEC). Dapper Labs tried to get the court to dismiss the case, however Marrero rejected the business’s movement.
Marrero’s judgment merely permits the case to continue based upon the judge’s viewpoint that NBA Top Shot NFTs may be considered a security. Marrero stated the judgment does not use to the sale and circulation of circulation, the Flow blockchain’s native crypto property. However, the Howey Test was used to the NBA Top Shot “Moments” NFTs, and the Howey analysis is what supports the judge’s choice.
“Although the literal word ‘profit’ is not included in any of the tweets, the ‘rocket ship’ emoji, ‘stock chart’ emoji, and ‘money bags’ emoji objectively mean one thing: a financial return on investment,” Marrero stated in the court filing. “The court is persuaded that Dapper Labs’s scheme to sell Moments plausibly reflects horizontal commonality by being ‘intertwined with interest in Dapper Labs,’ its burgeoning new blockchain, and the token that ‘powers it all.’”
Dapper Labs Responds to Judge Marrero’s Ruling on NBA Top Shot NFTs
On Wednesday, Dapper Labs commented on the claim and the judge’s current choice. “Today’s order in the Friel v. Dapper Labs matter – which the Court described as a ‘close call’ – only denied our motion to dismiss the complaint at the case’s pleading stage,” the business stated on Twitter.
“The judge did not conclude the plaintiffs were right, and it’s not a final ruling on the case’s merits. Courts have repeatedly held that consumer goods – including art and collectibles like basketball cards – are not “securities” under federal law. We’re positive the exact same applies for Moments and other antiques, digital or otherwise,” Dapper Labs included.
What do you believe the ramifications of this judgment could be for the NFT market as a whole? Let us understand what you think of this topic in the remarks area listed below.
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