• Tue. Jun 18th, 2024

Dapper Labs Confirms NBA NFTs Claim, Says They’re Not Securities

Maria Bartiromo

ByMaria Bartiromo

Jun 6, 2024

Dapper Labs and the United States Securities and Exchange Commission (SEC) have achieved a settlement that confirms NBA Top Shot NFTs are not securities, marking a significant ruling for the emerging non-fungible token (NFT) market.

Since 2021, the SEC has been investigating Dapper Labs, the company that created NBA Top Shot, a popular marketplace for exchanging basketball highlight videos as NFTs. The main focus of the inquiry was whether United States law required the NFTs offered for sale on the platform to be categorized as securities.

According to the settlement, which was completed yesterday, NBA Top Shot NFTs don’t satisfy the requirements for classification as securities. The settlement sets a significant precedent in the legal interpretation of NFTs.

This implies that different NFTs will be subject to various securities regulations. Each case will probably be assessed according to its unique features and the circumstances surrounding its sale and use.

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Dapper Labs CEO Speaks, Applauds SEC’s Decision that Supports Its NFT

Roham Gharegozlou, CEO of Dapper Labs, stated, “We are happy with the SEC’s decision, which supports our position that NBA Top Shot NFTs are digital collectables and not securities.” He added, “Without worrying about regulatory classification, we can now concentrate on growing our platform and providing our community with cutting-edge experiences.”

Because companies and creators currently have better knowledge of the regulatory environment, this clarity is anticipated to drive future growth and investment in the NFT market. Investor trust in the NFT market is expected to increase due to the judgment. The NBA Top Shot NFT industry may see more innovation and growth due to the confirmation that NFTs are not securities.

In February 2023, the judge rejected Dapper’s motion to drop the claim after deciding that NFTs can be defined from the Howey test perspective and referred to as securities. The Howey test, however, is a legal guideline for categorizing securities. 

Dapper Labs NFT Likely to Be Reviewed, Experts Comment

Because of this complex approach, future NFT ventures might still be examined, especially if they include profit-sharing or other elements more in line with traditional securities. Although they applauded the ruling, legal experts warn that the NFT sector remains complicated and changing quickly.

Blockchain technology expert Jennifer Carter stated, “This settlement offers a clearer path for NFT platforms like NBA Top Shot, but it’s not a one-size-fits-all solution.” She added that, ” To ensure compliance with new legislation, projects will need to maintain their close collaboration with legal advisors.”

The settlement with Dapper Labs is viewed as a positive outcome for the entire NFT ecosystem. Market players believe that this ruling will contribute to establishing NFTs as a legitimate class of digital assets.

Dapper Council Dismisses Claim, Compares NFT to Pokemon Trading Cards

Industry players are eagerly observing what the authorities and NFT platforms will do next as word of the settlement spreads. The report says that District Judge Victor Marrero has yet to accept the most recent settlement.

Recall, that Dapper Labs was dragged to court in 2021 with a class action because of its flagship product: NBA Top Shot Moments. The product was accused of being an unregistered security because the NFTs will likely increase with the whole project’s popularity.

The plaintiff had claimed that Dapper Labs restricted investors from making withdrawals at month’s end to retain their funds. They also claimed that the NFT could not be traded or bought on outside the Dapper platform as at the time the suit was filed.

Council to Dapper dismissed the claims, and went ahead to compare the said NFTs to Pokemon or basketball digital trading cards. The plaintiff claimed that the company’s restriction from selling the NFT on other platforms contradicts the current settlement agreement by allowing other marketplaces to trade the token. 

Dapper Labs, while explaining the situation, says it is committed to developing a recommended staff training session annually to enlighten its staff about the development of federal securities laws.

Maria Bartiromo

Maria Bartiromo

Maria Bartiromo is a renowned news writer and journalist, celebrated for her insightful reporting and authoritative voice. With a career spanning years, she has established herself as a trusted source of accurate and comprehensive news analysis, keeping readers informed on vital global developments.

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