Dapper Labs settles NBA Top Shot lawsuit for $4 million

The creators of NBA Top Shot and other on-chain collectibles, Dapper Labs, ultimately settled the class-action lawsuit, agreeing to pay $4 million.

Disgruntled consumers alleged that Top Shot NFTs were illegal securities, leading Dapper Labs to agree to pay plaintiffs $4 million for their damages and costs incurred, as the court heard on Monday. deposits.

Roham Gharegozlou, CEO of Dapper, said that with the settlement, anyone wishing to claim that Top Shot NFTs are securities will be excluded once the settlement is approved. This legal certainty is important and allows Dapper Labs to focus on creating exceptional user experiences.

It was a major blow to the trial last February when a federal judge allowed the case to continue. The judge also analyzed Top Shot NFTs as potentially eligible as securities because they are on Dapper Labs’ Flow blockchain.

The judge also pointed out that Flow was a “private” blockchain, unlike Bitcoin or Ethereum, which raised doubts about Dapper’s control and implicit claims of value growth.

Despite Dapper’s description of Flow as decentralized, the settlement includes requests for business adjustments, such as transferring FLOW tokens for the ecosystem reserve to the Flow Foundation, enabling third-party marketplaces for Top Shot NFTs and improving withdrawal management.

This case began in 2021, when the digital asset market was booming and the legal status of NFTs was in question. Unlike other digital tokens, NFTs have not received the same level of pushback as securities in most cases, despite regulatory crackdown.

Overall, Dapper Labs’ settlement removes legal questions surrounding NBA Top Shot NFTs, allowing the company to focus on improving its users’ experience. It also reports on current and emerging regulatory concerns and practice changes observed within the crypto assets industry.

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